June 13th 1998

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Articles from this issue:

Free markets: the ups, the downs

The threat to sovereignty

Living in a globalised world

The new economic freedom

Globalisation: the downside

ASIA: What Happened?

Taking control of our destiny

Policy 2: Using the Reserve Bank to boost capital investment

Policy 3: Boosting national savings

Policy 4: Justice for families

New Struggle, New Agenda, New Strategy

EDITORIAL: An idea whose time has come


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Living in a globalised world

by Patrick Byrne and Brendan Rodway

News Weekly, June 13, 1998
“Globalisation is the process of opening up the economy of the entire planet to multinational corporations, without demanding of them any commensurate social or moral responsibility.”

— B. A. Santamaria

It is the enormous economic power of the world’s major corporations that is driving the globalisation process. The world’s top 200 corporations have over 28% of the world’s annual production, employing only 18.8 million people (i.e. 0.75% of the world’s workforce). They are so large that of the world’s 100 largest economies, 51 are corporations and only 49 are countries — Mitsubishi is larger than Indonesia, General Motors is bigger than Denmark, Ford is bigger than South Africa, Toyota is bigger than Norway. They are headquartered in just seven countries, Japan, the US, Germany, France the UK, the Netherlands and Switzerland.

According to The Economist magazine, the combined assets of the 50 largest commercial banks and diversified financial companies amounts to nearly 60% of the world’s estimated $US20,000 billion in global stock of productive capital.

Over half of the sales of the top 200 corporations are in just five economic sectors, trading, automobiles, banking, retailing and electronics.

Thus, it is not surprising that globalisation is causing a radical shift of economic power away from governments to such corporations and the markets they govern.

It was in the 1960s that the seeds of globalisation were sown.

Western government policies had been designed to draw together a powerful economic block against the Soviet Union. The USA opened its huge domestic market to its allies and to non-aligned nations which spurred their economic growth and gave good reason to ignore the condition-laden blandishments of the USSR.

As the Soviet juggernaut slowed and suddenly crumbled, an international economic infrastructure was in place greatly benefitting multinational organisations. Increasingly, they could operate with fewer restrictions, pay less taxes and make significant profits.

This period also witnessed a rapid expansion in new technologies, from the nuclear industry to computers, from robots to genetic manipulation.

The application of new technologies has provided multinational corporations with enormous mobility — be it rapidly shipping their factories around the world or electronically their profits into low tax nations in a fraction of a second.

This array of technology has given them the ability to produce goods and services with vastly reduced workforces, to transfer financial capital around the world and to speculate on a minute-to-minute basis on financial and currency markets.

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