THE CONTEMPORARY

WORLD:
02 WORKSHEET 2

Submitted By:

Acuna, Ashley Mon

Cruz, Daniel Sam
Dizon, Milli Vonn
Kangken, Pauline Mary
Magallanes, Lyndon
Ruel, John Kevin
 WORKSHEET # 2

1. The Historic Rise of the Global Corporation – Three Periods

As a result, how one defines globalization helps to 'place' global firms, both within
globalization's complex interacting pattern and within certain historical periods. According to
Moore and Lewis, the entities operating in this environment had 'head offices, foreign branch
plants, corporate hierarchies, extraterritorial business law, and even a bit of foreign direct
investment and value-added activity,' and were functionally and organizationally similar to
contemporary organizations (Moore and Lewis, 2000: 31–2). The vast heterogeneity of this long
period, on the other hand, leads most scholars to place the direct antecedents of the modern
global corporation within the dynamics of a two-century-plus period preceding the end of World
War II, in which the modern nation-state system emerged in ways that allowed invention and
social organization to combine vastly increased world capital and nation-state wealth. As the
world recovered from the massive destruction of World War II, American corporations
dominated economic recovery and expansion, which essentially stood for what had come to be
known as multinational corporations (MNCs) for a period from the end of the war until the
reentry of Japanese and European corporations onto the global scene (Barnet and Mueller,
1974).

2. How Do Global Corporations Function? What Constitutes a Global Corporation?

A modern global firm is referred to as a multinational corporation (MNC), a transnational
corporation (TNC), an international company, or a global corporation. While the remainder of
this chapter will concentrate on elucidating some of these disparities, Iwan (2012) provides
some that are particularly relevant. The United Nations Centre on Transnational Corporations
(UNCTC) has described a TNC as a "business that engages in activities that provide value"
(manufacturing, extraction, services, marketing, etc.). By 1974, Barnet and Mueller had defined
the MNC as a key economic global player and had begun an excellent depiction of how this
corporate form was emerging to dominate many sectors of global production and exchange in a
ground-breaking volume (Barnet and Mueller, 1974).

The overall structure of this system would remain in place and evolve throughout the
1970s and 1980s a time period that coincides with three fundamental innovations that have
significantly altered the character of the global corporation: the advent and impact of
digitalization and instantaneous global communications; the structural transformation of global
commerce from producer-driven commodity chains to buyer-driven; and the growing role of the
private sector in global commerce. FDI supplies were viewed as major elements of global
economic development, and during various policy periods as ‘essential' for the development of
what was then viewed as the ‘third' world, even though the vast majority of FDI in the 1990s
was between countries of the ‘developed' world primarily North America, Europe, and Asia
despite the fact that the vast majority of FDI in the 1990s was between countries of the
‘developed' world primarily North America, Europe, and Asia
 This gradual shift in manufacturing location transformed the dominant manufacturing
firms of these older developed companies into more fully extended and integrated
organizational forms, moving many of them from a self-conscious understanding of themselves
as 'national firms operating internationally' to more authentically global firms requiring
extensive corporate integration of their activities across the globe. From the 1970s onwards,
Japan's development as a major manufacturer nation, particularly of autos and consumer
electronics, ushered in new forms of effective manufacturing centered on quality and flexible
production regimes, a shift that was repeated by European firms rejoining global commodity
chains. Based on his research on US firms, suggests that the more buyer-driven they are, the
more nodes exist within their networks, and the greater either their interdependence on other
actors or their imperative to establish supply, finance, and other extensions (through whatever
ownership or contract means).

3. What Constitutes a Global Corporation?

The so-called "emerging economies," particularly Brazil, India, and China (the "BRICS
economies"), have become the most dynamic sector of global corporate growth, owing in part
to their enormous FDI inflows over the last three decades. Even if total FDI flows are still lower
than those between fully developed nations,

Global corporations from emerging economies are on a trajectory that will soon place
them solidly inside those of the historically more developed economies, based on their relative
size, growth, and variety of activity. The number of global enterprises from emerging market
economies listed in the Fortune Global 500, which evaluates companies based on revenue,
increased from 47 to 95 in 2010. These firms have also gotten involved in the wide pattern of
global mergers and acquisitions (M&A), which is the most common method of corporate
concentration.

Some observers believe that our earlier classifications between global north and south
are no longer adequate to predict the general dynamics of growth and inactions within the
global system, owing to the differential influence of such emergent global dynamics. The relative
importance of their global corporate cultures can be gauged in part by the fact that Chinese
corporations accounted for 73 of the Fortune 500 lists’ largest in 2012 (CNN Money, 2012), and
while Brazil and India, with eight each, currently account for a small share of such corporations,
emerging market countries are expected to nearly double their share of global trade over the
next 40 years, reaching nearly 70% by 2050. (Ahern, 2011).

Emerging significant enterprises from other developing economies around the world,
including Malaysia, Mexico, Russia, Turkey, and Vietnam, have joined the BRICS. The following is
a list of some real-world examples based on 2009 data.
4. Emerging Market Global Corporations
According to Dadush and Shaw, China will have the world's largest economy in 2050, but
its per capita income will be just 37% of that of the United States; India will have the third
largest economy, with a per capita income of only 11% of that of the United States (Dadush and
Shaw, 2011: 30). State-owned corporations, defined as ‘enterprises comprising parent
enterprises and their foreign affiliates in which the government has a controlling interest (full,
majority, or significant minority), whether or not listed on a stock exchange,' are playing an
increasingly important role in these emerging economies (UNCTAD-WIR, 2011: 28).

Another view of China's state-owned global corporation is that they are relics of China's
state socialist system, which perpetuates in its revised neo-capitalist form institutions that lack
the essential features of economic efficiency and competitive discipline that the global
corporate structure promotes, and are thus subsidized by the entire Chinese state (Woetzel,
2008: Greenacre, 2012). Another perspective views these companies as a "new face" of global
corporate reality, arguing that their strong domestic markets and ability to raise capital from
within their host countries contribute to an overall expansion of global corporate reach,
particularly when considering their proclivity to invest in south–south ventures and "greenfield"
ventures (that form of FDI in which the parent firm starts a new venture in a foreign country by
creating new operational facilities from the ground up).

In these economies, the traditional model of organization for global firms was through
FDI, which manifested itself through equity holdings and created structures in which parent
firms owned and directly managed their subsidiaries – an organization form known as
internalization because control and risk, as well as the vast majority of revenues and profits,
remained with the parent. The fact that NEMS growth has outpaced that of base industries in
electronics, pharmaceuticals, footwear, retail, toys, and garments suggests the relative
importance of NEMS to both the global economy and the structure and governance of global
corporations in the future: in electronics, the ratio is 6:1, and in garments, it is 1:1.

CSR is a broad set of recommended governance structures that includes laws, norms,
codes of conduct, and standards produced mostly by the worldwide NGO community. It is the
result of more than three decades of strong critique of global corporate behavior and its various
harmful repercussions (Levy and Kaplan, 2007).

5. The Normative Case Re: Global Corporations

Much of the post-colonial critique that came to be framed in the discourse of north–
south globalization, anti-globalization movements, and dependencia focused on the role of
multinational corporations as agents of a system that, on balance, was resulting in greater global
wealth inequality, income inequality, lack of effective worker protection, environmental
degradation, producing national cultures of corruption through corporate collusion, and in some
cases, was threatening the survival of indigenous peoples.

Overall, data on global income inequality suggests (as it has for the better part of two
decades) that inequality continues to be widely distributed both between and within countries:
 as richer countries grow further apart from poorer countries, so within nations, across all three
developmental categories (older developed countries, developing countries including the BRICS,
and more newly developing countries), economic growth continues.

Political ideologies oriented around the protection of society's primary wealth holders
have increasingly challenged the role of the state as a vehicle for redistribution over the past
four or five decades, a pattern evident in many of the current Eurozone crises, in which powerful
political forces seek to exempt both corporate and individual wealth holders from taxation
patterns suitable to support the state's 'burdens' through effective taxation.

6. From Triumph to Crisis

The last decade of the twentieth century began with the spectacular collapse of Eastern
Europe's communist economies and a lot of triumphalist discourse about the emergence of a
new market-driven global economy that left borders obsolete and rode on information
technology breakthroughs.

The IMF, which encouraged ever-freer global capital flows, and the World Bank, which
would supervise the transformation of developing countries along free-market lines and manage
their absorption into the global economy, formed the holy trinity that would support the new
economic order.

7. Multilateralism in Disarray
The Trade-Related Intellectual Property Rights Agreement (TRIPs) consolidated the hold
over high-tech innovations by US corporations such as Intel, Microsoft, and Monsanto, while the
Agreement on Agriculture institutionalized a system of monopolistic competition for third-
country markets between US agribusiness interests and the agribusiness interests of other
countries. When the Asian financial crisis overtook countries that had been viewed as America's
most formidable competitors by many in the business community, Washington did not strive to
save them by advocating expansionary policies.

Whether it was the Bretton Woods institutions, the United Nations, or the Group of
Seven that provided the framework for 'hegemonic leadership,' the favored US policy for most
of the postwar period was to act to achieve its interests under multilateral cover. While using
the UN to justify its policy of isolating Iraq, Washington also refused to pay its UN dues, owing to
the Republican right's influence, which was enraged that the world organization did not submit
totally to US policy.

However, just a few months later, the Bush administration was back in fine unilateralist
form, withdrawing from the newly formed International Criminal Court and announcing its
intention not to renew the Anti-Ballistic-Missile Defense Treaty that Washington had negotiated
with the Soviet Union in 1972.
8. The Crisis of the Neoliberal Order
The high growth rates and affluence of a few enclaves of the world economy, such as
East Asia in the 1980s, were (mistakenly) presented as paragons of market-led development,
masking the realities of expanding worldwide poverty and inequality. In the aftermath of the
crisis, the IMF came under fire for pushing draconian programs on Asian economies that merely
hastened economic contraction while putting up multibillion-dollar rescue packages to assist
foreign banks and speculative investors rather than the crisis economies.

The IMF's role in East Asia prompted a re-examination of its role in imposing structural
adjustment programs in much of Africa, South Asia, and Latin America in the 1980s, and the fact
that these programs had exacerbated stagnation, widened inequalities, and deepened poverty
in these countries, as they had in Asia, became widely recognized.
In the years following the WTO's founding in 1995, an increasing number of
governments, communities, and social movements realized that by joining the WTO, their
governments had agreed to a charter for corporate rule that consumer advocate Ralph Nader
dubbed "trade über alles," or "trade above equity, justice, the environment, and practically
everything else."

Debt forgiveness, a new global financial architecture, and reform of the WTO and
Bretton Woods decision-making mechanisms were among the high-profile promises that raised
hopes that change was finally on the way.

9. The Corporation under Question

The rapid melting of the polar ice caps could be traced to Big Oil and the automobile
giants' continuing promotion of an environmentally destabilizing petroleum civilization, and,
more broadly, to the process of uncontrolled growth driven by transnational corporations, by
the beginning of the twenty-first century, a sense of environmental emergency was also
spreading, and to increasing numbers of people, the rapid melting of the polar ice caps could be
traced to Big Oil and the automobile giants' continuing promotion of an environmentally
destabilizing petroleum civilization (TNCs).
Ironically, the suspicion of corporations was at an all-time high in the United States at
the apogee of the so-called New Economy. '72 percent of Americans feel business has too much
power over their lives,' according to a Business Week poll. 'Corporate America, ignore these
trends at your risk,' the journal cautioned.

Members of the global elite with sensitive antennae took such warnings seriously, and
the World Economic Forum (WEF) annual meeting in Davos, Switzerland, became the venue for
formulating a response that would go beyond the bankrupt strategy of denying that corporate-
driven globalization was causing enormous problems to promote a strategy that would "bring
the fruits of globalization and free trade to the many," as British Prime Minister David Cameron
put it.
10. Cracks in Military Hegemony
Strategic power cannot be reduced to being decided just by the dynamics of corporate
control, as orthodox Marxism claims. Indeed, in many cases, corporate power and state power
may be at odds.

The US Army, Air Force, Navy, and Marine Corps are the hidden fist that keeps the world
safe for Silicon Valley's technologies to thrive.' When Al Qaeda hijackers flew their planes into
the World Trade Center and the Pentagon on September 11, many people in the South were
torn between outrage at the subsequent mayhem and a feeling that the US 'had it coming.'

And, even as many traditional allies enlisted in the so-called "war on terror," US
unilateralism is eroding old friendships as Washington prepares to attack Iraq, despite the stated
wishes of the vast majority of European Union members.

A vast network of bases and the ability to deploy force into every corner of the globe,
such as Washington's, are typically regarded as evidence of immense might. However, this
‘strength' might become a vulnerability due to over-extension or a widening gap between
resources and capabilities. And, as will be shown below, following September 11, over-extension
of US strategic might became a very real possibility.

11. The Degeneration of Liberal Democracy

The United States is a Lockean democracy, which means that its foundation is the late-
seventeenth-century English thinker John Locke's political philosophy, and its ability to project
its mission as the extension of systems centered on free elections to choose governments
devoted to promoting liberal rights and freedoms continues to be a strong source of legitimacy
in many parts of the world.

However, in recent years, Washington- or Westminster-style democracies, or, as William

Robinson calls them, 'polyarchies,' have devolved into increasingly stagnant and polarized
political systems, such as those in the Philippines, Brazil, and Pakistan, with their focus on formal
rights and formal elections and their bias against economic equality achieved through such
measures as asset and income redistribution, prompting some theorists to ask why.

In the 1980s and 1990s, a growing number of Americans realized that their liberal
democracy had been so thoroughly tainted by corporate money politics that it deserved to be
labeled a "plutocracy.". Corporate money mixed with constitutional procedures designed to
limit majority control resulted in the election of a man who lost the popular vote and, according
to some, the electoral college vote as well, as president of the world's most powerful liberal
democracy.

While Congress and the Executive were busy checking each other on former President
Clinton's sexual mores in typical Montesquieuesque fashion, both institutions were unable to
deal with the Pentagon's acquisition of political power. There were secretive and opaque
 ministerial councils, a powerful European Council, and a secretive and opaque European Court
of Justice.

12. The Rise of the Movement

The storm of public outrage moved on to Washington in April 2000 for the World Bank-
IMF spring meeting; Chiang Mai in Thailand in May 2000 for the Asian Development Bank annual
meeting; Melbourne in early September 2000 for the World Economic Forum gathering; and
Prague in late September 2000 for the World Bank-IMF annual meeting.

While a forlorn global elite gathered in Davos in late January 2001 to consider the
significance of the developing 'anti-globalization movement,' 12,000 members of worldwide civil
society gathered in Porto Alegre, Brazil, to announce that 'another world is possible.'. In
November 2001, the desert nation of Qatar was chosen to host the WTO's Fourth Ministerial,
while a remote ski resort high in the Canadian Rockies was picked to host the following G-8
conference in July 2002.

Enron was generous with those willing to serve it to ensure that the government would
look the other way and allow the 'market' to have its way, and few earned more Enron dollars
than George W. Bush, who received $623,000 from his friend Kenneth Lay, Enron CEO, for his
political campaigns in both Texas and nationally.

Many 'start-ups' lost all ties to production and were primarily used to inflate share
prices so that venture capitalists and executives with stock options could profit from an early
sale, after which the company was left to languish and finally perish.

Some in the Pentagon now believe that relying on Afghan mercenaries to undertake the
fighting on the ground for the US led to Osama bin Laden's escape from Afghanistan's Tora Bora
mountains. As the military effort in Afghanistan waned, the UN was called in to help broker a
political settlement that would bring in representative democracy, while the European Union
was dragged into policing the peace with a British-led armed contingent.

13. Liberal Democracy Loses

The US had only been in the war for three months when legislation and executive orders
were passed that established secret military tribunals to try non-US citizens, imposed guilt by
association on immigrants, launched a massive search for 8,000 young Muslim men, authorized
the attorney general to hold aliens indefinitely on suspicion, expanded the use of wiretaps and
secret searches, and allowed the use of secret evidence in immigration cases.

In the months after September 11, that Lockean-Jeffersonian heritage was badly
damaged, as the ruling Republicans embarked on a campaign to persuade the American people
to award the government massive new powers over the individual in the name of ensuring order
and security.
 During a historic Senate hearing, Attorney-General John Ashcroft said that critics of the
Bush administration's security measures were fear-mongers who "scare peace-loving people
with phantoms of lost liberty [and] encourage terrorists.". Though the popularity of the anti-
terrorist campaign has shackled many liberals and progressives, it is likely that as it becomes
clear that the campaign's primary goal is to manage domestic dissent and drive a domestic
counter-revolution, the "cultural civil war" between liberals and conservatives will become less
and less civil.

14. Porto Alegre and the Future

In retrospect, September 11 marked a minor reversal of this protracted crisis, but the
system of global capitalism's increasing flaws, including the liberal democratic political regimes
and American military hegemony that serve as its protective canopy, cannot be covered for
long. The reaction to capitalism's inevitable commodification of the natural and social world
during the first phase of globalization, which lasted the nineteenth century and concluded in
1914, was a desire for community, for a new basis of social solidarity beyond the market.

However, following its defeat during WWII, the conflict between two reactions to
unrestricted free-market capitalism, Keynesian capitalism and state socialism, dominated the
second half of the twentieth century. One of these is extreme Islamism, which regarded US
corporate and military power as the pinnacle of a long-running Western campaign to undermine
Islamic societies' integrity, reaffirmed the oneness of the Islamic faith, people, and state, and
vowed war against the US.

Porto Alegre, a medium-sized city in Brazil, has become the byword for the spirit of the
developing movement against corporate-driven globalization. It hosted the World Social Forum
(WSF) in 2001 and 2002. The forces of genuine solidarity and community have no choice but to
intervene quickly and persuade the disenchanted that another, better world is indeed possible,
because the alternative, as in the 1930s, is for terrorists, religious and secular right demagogues,
and purveyors of irrationality and nihilism to fill the void.