Can We Rein in Corporate Power Within Capitalism? Or is Socialism Necessary?

Within the new movements against corporate globalization and war, an old debate has reemerged.

Is the epic human and ecological crisis we face simply the product of mismanaged capitalism – the result of greedy, power-hungry people at the helm of business and government? Or is it the inevitable byproduct of the profit system?

Can “civil society,” operating through elections and traditional political avenues, tame the monstrous power of giant corporations within the framework of capitalism? Or does solving the world’s dire problems require placing the corporations under the control of a democratic socialist system?

Unfortunately, most opinion leaders on the left tend to simply avoid this fundamental question, while offering “solutions” that amount to mere band-aids on the social wounds inflicted by capitalism.

A good example of this is the acclaimed documentary, The Corporation, which opened to packed theaters this summer. Its online summary explains: “You’d think that things like disasters, or the purity of childhood, or even milk, let alone water or air, would be sacred. But no. Corporations have no built-in limits on what, who, or how much they can exploit for profit.”

“Democracy is a value that the corporation just doesn’t understand. In fact, corporations have often tried to undo democracy if it is an obstacle to their single-minded drive for profit. From a 1934 business-backed plot to install a military dictator in the White House (undone by the integrity of one U.S. Marine Corps General, Smedley Darlington Butler) to present-day law-drafting, corporations have bought military might, political muscle, and public opinion.”

However, despite such piercing criticisms of the existing system, the movie traces the problem back to a legal detail that defines corporations as “people,” thereby according corporations the same rights as individuals. While it is true that many attempts to regulate corporate power have been thwarted by this legal loophole, this side-steps the essence of the problem, flipping reality upside down.

It is not bad laws that have allowed corporations to dominate society, but rather it is corporations’ dominant economic position that has afforded them the power to design the laws, political systems, and the ruling ideologies which serve to legitimize their corrupt rule.

Consider the awesome power concentrated in the hands of the few owners of the big corporations. Five companies dominate the U.S. media industry. The retail industry is controlled by Wal-Mart and a couple of other major chains. A handful of corporations, with Microsoft at their head, control the “information age” industries. A few auto, aerospace, oil, and tire corporations dominate global transportation, effectively preventing the turn to a renewable energy economy and better mass transit.

The overriding goal of these corporations is not to produce better TV programs, clothing, spreadsheet software, or automobiles; their goal is to maximize profits. Achieving this requires a relentless drive to cut their costs and increase their market share at the expense of all other considerations. Brian Moffat, Chairman of Corus, a European steel company, recently admitted this after cutting 6,000 jobs, saying: “Corus does not make steel. It makes money.”

Wal-Mart

Wal-Mart is the largest corporation in the world, and has set the standard for effective business methods. The Walton family, which owns Wal-Mart, includes five of the ten richest people in the world.

“Wal-Mart and the Waltons got to the top the old-fashioned way – by roughing people up. The corporate ethos emanating from the Bentonville headquarters dictated two guiding principles for all managers: extract the very last penny possible from human toil and squeeze the last dime from every supplier.” (transnationale.org)

The products sold in Wal-Mart are typically made under brutal sweatshop conditions. The suppliers who get Wal-Mart’s business are those who can deliver the cheapest prices by pushing down workers’ wages, repressing strikes, and avoiding taxes and environmental regulations. Suppliers who cannot meet these standards are forced out of business or “relocated.” This race to the bottom is the inevitable logic of capitalism.

An observer described one of Wal-Mart’s suppliers, a Honduras sweatshop: “Going into these factories is like entering a prison where you leave your life outside…The workers need permission to use the bathroom, and they are told when they can and cannot go…Young women enter these factories at 14, 15, 16, and 17 years old. They become a mechanism of production, working 9 hours a day plus two, three, or four hours overtime, performing the exact same piece operation over and over, day after day.”

The rise of Wal-Mart brilliantly illustrates another basic law of capitalism – the inevitable tendency toward greater and greater concentrations of wealth and power. Advocates of reform within the profit system often wax nostalgic for early capitalism, where freer competition between smaller, often local, businesses predominated. But all of modern history has verified Karl Marx’s prediction over 150 years ago of the inevitable rise of colossal, global monopolies that have eclipsed the naive ideal of a “free market.”

Whenever a new Wal-Mart bullies its way into town, the surrounding small retail outlets are squeezed out of business. They simply can’t match the low prices Wal-Mart achieves through its ruthless methods and global purchasing power. Even smaller corporate chains are being driven into bankruptcy.

The case of Wal-Mart demonstrates that capitalism offers little room for the dream of creating “ethical corporations” that would pay living wages and safeguard the ecosystem.

Imperialism and War

The ruthless competition between corporations is mirrored in the relations between countries. Corporate America is engaged in a relentless struggle against European and Japanese capitalism. These advanced capitalist countries, in turn, are united in maintaining the neo-colonial world in economic prostration, as a source of cheap labor, raw materials, and dependent consumer markets.

Military power under capitalism is simply a means for extending the economic and political power of the ruling class. The war and occupation of Iraq, for instance, can only be understood in this context. As the lies the Bush administration used to justify the war are exposed, it is clearer than ever that the occupation of Iraq is about dominating world oil supplies and expanding U.S. imperial domination.

Britain and the U.S. came into conflict with France, Germany, Russia, and others in the run-up to war because these countries stood to lose lucrative contracts with the Iraqi regime. More broadly, these countries also feared that the repercussions of a U.S. invasion and occupation would severely rebound against the interests of global capitalism.

The conflict over Iraq is not new. Capitalism’s need for constantly expanding markets has sent corporations and imperialist armies all over the globe, systematically pillaging and plundering the planet. Contrary to the myths of official history, both World Wars were the result of inter-imperialist competition over markets and colonies.

Reformism

While acknowledging the destructive political and economic logic of capitalism, many progressive thinkers argue that a mobilized citizenry can grab the reigns of society out of corporate hands and steer a course toward social justice. Ralph Nader is perhaps the most outstanding example of this idea in contemporary U.S. politics. Yet even when reformist governments have been elected into power, they have met fierce, often brutal resistance from the ruling class.

For example, in Chile in 1970, Salvador Allende’s reformist socialist government was elected into power. Allende attempted to carry out far-reaching reforms, such as nationalizing U.S.-owned copper mines and redistributing land to impoverished farmers.

U.S. imperialism and the ruling elite in Chile, though defeated at the ballot box, used their economic power to systematically sabotage the Allende government. The U.S. cut off all foreign aid and credit and boycotted Chilean copper, their economic mainstay. Chilean big business launched “strikes of capital,” refusing to transport food and other necessities.

On September 11, 1973, the Chilean military elite launched a bloody CIA-sponsored military coup. Tens of thousands of activists were killed, “disappeared,” or imprisoned in Augusto Pinochet’s torture chambers. U.S. loans and economic aid immediately began flowing again into the Chilean economy.

This experience has been repeated over and over again throughout Latin America and around the world whenever left-wing governments have come to power. These events confirmed, once again, that the capitalist class will resort to the most brutal methods to defend its interests.

Today, the U.S.-sponsored opposition movement in Venezuela, based on the old ruling oligarchy, has used every possible means to undermine Chavez’s reformist government, which has won popular elections or referendums eight times since 1998. This included a military coup in 2002, partially funded and coordinated by the CIA, which was only defeated by a mass uprising in support of Chavez.

While Chavez has so far managed to maintain his tenuous hold on government, he has not moved to decisively break the power of the oligarchy by overthrowing capitalism. However, there can be no stable half-way house between revolution and counter-revolution. At a certain point, one or the other will have to triumph. Unless the Venezuelan revolution moves forward to socialism, the counter-revolution will eventually crush it.

In most cases where reformist governments have come to power, though, the economic and political pressures of capitalism sufficed to force these governments into retreat or defeat without resort to violent overthrow. In Brazil, for example, Lula’s Workers’ Party was elected in 2002 promising to take on big business, but pressure from the IMF and World Bank compelled it to carry out neo-liberal attacks on Brazilian workers.

Socialist Policies Needed

All these experiences demonstrate that taking on big business will require more than winning elections or even building mass movements. As long as the world economy remains under the control of tiny ruling elites, democracy will remain an illusion and needed reforms cannot be sustained.

This perspective is made even clearer when we acknowledge that all the pressing problems of our world are global, not national, in character. Even the most determined and powerful movements for reform will never find success as long as they limit themselves to the confines of national capitalism.

Instead, we need to unite the workers and oppressed people internationally behind the idea of taking the huge corporations into public ownership under democratic workers’ control. By taking the global economy out of the ownership and control of capitalist elites, the vital decisions of society would no longer be determined by the drive for maximum profit. Instead, decisions on how resources are distributed and what and how products are made would be decided democratically. This is socialism.

The gigantic resources now devoted to war making, which includes nearly one third of the world’s research and development scientists, could be redirected toward preventing environmental catastrophe, eliminating poverty, and preventing disease. In fact, by every scientific estimate there is more than enough wealth and productive capacity to guarantee a decent standard of living for all humanity. A socialist society, freed from the domination of the filthy-rich, could organize the rapid, democratic distribution of the global wealth created by our collective labor.

Racism and religious prejudice, alongside sexist and homophobic attitudes, continue to thrive on the basis of class society. In the age-old tradition, ruling elites use divide-and-conquer techniques and create scapegoats to prevent the exploited majority from uniting around our common class interests. Under socialism, the elimination of a ruling class will simultaneously eliminate the foundations for bigotry, opening the door to put an end to the vile legacies of racism, sexism, and all forms of oppression.

Only a Pipedream?

Reformist theorists have long joined the open ideologues for capitalism in condemning revolutionary socialism as a dangerous pipedream. At the same time, reformists rarely bother to explain how their promises can be achieved within the constraints of capitalism, if they address the issue at all.

The reality, however, is that radical reform within capitalism is the pipedream. At the same time, the last 150 years have provided ample evidence that working people, if sufficiently organized and politically conscious, have the power and potential to carry out the socialist transformation of society.

There have been dozens of revolutionary uprisings across the planet since Karl Marx wrote the Communist Manifesto, each demonstrating the power of the working class to take the reigns of society into their hands. Each general strike proves the practical potential of working people organizing themselves on a mass scale to run society, while simultaneously exposing the completely unnecessary and parasitic role of the capitalist class.

One of the most revealing revolutionary upheavals in recent times took place in France in 1968. The accumulated frustrations of the French working class and youth exploded after a student strike was violently attacked by the police. Within two weeks France was completely paralyzed, as over 10 million workers went out on strike.

Students occupied their schools, setting up committees to run the strike and turning their academic resources to the service of revolution. Working people also occupied their factories, setting up elected strike committees and coordinating their actions with other strikers.

These elected workplace, student, and community committees, which are the hallmark of every revolutionary situation in modern history, represent the embryos of the future socialist democracy. Marxists call for such committees to send representatives to regional and national councils, consciously linking together these organs of workers’ power. Although initially thrown up as a means of conducting the immediate struggle, such workers’ councils begin to take on the character of a new governing power, challenging the official regime for legitimacy.

This process began to develop in France 1968, but was never brought to fruition because of the active opposition of the reformist leaders of the unions and workers’ political parties. On the other hand, there was no genuine Marxist organization that was large enough or politically rooted enough to wage a struggle against the established reformist leaders, arguing a revolutionary course. This same combination of factors is fundamentally to blame for the numerous failed revolutions in the 20th century.

Socialist Democracy

The experience of France 1968 provided yet another glimpse of what is possible. Instead of workplaces, schools, and other institutions being run top-down by bosses and appointed administrators, they could be run by elected councils of workers, students, etc. Weekly or monthly workplace meetings could recall unaccountable representatives, and become a forum for debate and genuine, local, participatory democracy. Workplace and community councils could send delegates to regional and national councils, forming a government of, by, and for working people.

A socialist democracy would have nothing in common with the totalitarian bureaucracies that presided over the Soviet Union and other so-called Communist regimes. Although these Stalinist countries had elements of a socialist planned economy, they were not truly socialist because working-class people did not democratically control society. Instead, the corruption and repression by the ruling bureaucracy ultimately led to economic collapse and mass rebellion.

On the other hand, workplace democracy and democratic planning, combined with a massive program of education, could unleash the deep, untapped wells of human creativity, now crushed under repressive workplace environments, poverty, and unemployment. This coordinated collective ingenuity, combined with the elimination of the colossal waste caused by capitalism, could open the doors to a sustainable, peaceful society of plenty.

Ty Moore, Justice #40, September-October 2004

“Efficiency” Under Capitalism

Islands of obscene wealth exist amid oceans of extreme poverty. The annual income of the poorest 47% of the world’s population, nearly 3 billion people, equals the fortunes of the world’s 225 richest individuals ($1 trillion).

Global military budgets consume another $1 trillion per year (the Pentagon accounts for almost half this). Just a fraction of this sum could provide toilet facilities for the 2.5 billion people who lack them.

80% of disease in developing countries is due to a lack of sanitation facilities. The World Health Organization explains: “Half of all hospital beds in developing countries are full of people suffering from waterborne diseases. Human waste is responsible…” Waterborn diseases account for 6,000 of the 30,000 children who die each day from preventable diseases.

Are these gross misallocations of global resources necessary? Would society fall apart if the average American CEO wasn’t paid more in 1.2 days than the average American worker makes all year long? The ideologues for capitalism defend such inequities, but fortunately a growing majority of humanity has rejected such nonsense.

In their own words…

“The only moral virtue of war is that it compels the capitalist system to look itself in the face and admit it is a fraud.” – Helen Keller from “The Menace of Militarism”

“I still consider myself a socialist. I think that particularly now in the U.S. with the education crisis, the housing crisis, the health crisis, the jobs crisis, we need to place discussions of socialism on our agenda.” – Angela Davis, Leading African-American feminist and anti-prison activist

“The philosophers have only interpreted the world, in various ways; the point is to change it.” – Karl Marx