The state is more powerful than ever; the view that big business alone shapes the new world order is wrong

9 July 2001

There is a view fashionable in the media that the world is being taken over by huge multinational corporations, accountable to no one.

"Governments are reduced to playing the role of servile lackeys to big business," Noreena Hertz, the dissident financier, wrote in these pages recently. Even the US government has surrendered state power, she says, citing "George W Bush's shameful obsequiousness to big energy corporations".

For all the vivid examples of modern corporate power, such as the annual income of Motorola being equal to the annual income of Nigeria's 118 million people, it is folly to believe that big business on its own is shaping the new world order. This allows the argument against globalisation to be depoliticised, reducing it to single issues of "ethical trading" and "codes of conduct", and inviting its co-option. Above all, it misses the point that state power in the west is accelerating.

"Globalisation does not mean the impotence of the state," wrote the Russian economist and activist Boris Kagarlitsky, "but the rejection by the state of its social functions in favour of repressive ones, irresponsibility on the part of governments and the ending of democratic freedoms." The illusion of a weakened state is enticing: indeed, it is the smokescreen thrown up by the designers of modern, centralised power. Margaret Thatcher concentrated executive power while claiming the opposite; Tony Blair has done the same. The European project is all about extending the frontiers of the state. Totalitarian China has embraced the "free" market while consolidating its vast state apparatus. The autocracies in Singapore and Malaysia achieved the same while growing stronger. (Not surprisingly, Blair is an admirer of Singapore.)

It is the American state that surpasses them all, and it has never been more powerful. The notion that George Bush is "obsequious to big energy corporations" (and ought to be ashamed of himself) is naive. Big oil, like big weapons manufacturing and big agribusiness, has always been as one with the occupants of the White House and the US government; they are interchangeable. That is the American way. Without government patronage, some of the greatest corporations would fail. The Cargill Corporation, which dominates the world trade in food grains, would not enjoy its monopoly, were it not for years of big subsidies to American agribusiness, as well as US government policies that used "food aid" to subvert the agriculture of developing countries.

It was the triumphant American state that fashioned the present "global economy" at Bretton Woods in 1944, so that its military and corporate arms would have unlimited access to minerals, oil, markets and cheap labour. In 1948, the State Department's senior imperial planner, George Kennan, wrote: "We have 50 per cent of the world's wealth, but only 6.3 per cent of its population. In this situation, our real job in the coming period is to devise a pattern of relationships which permit us to maintain this position of disparity. To do so, we have to dispense with all sentimentality . . . we should cease thinking about human rights, the raising of living standards and democratisation."

The World Bank and the International Monetary Fund were invented to implement this strategy. Their base is Washington, where they are joined by an umbilical cord to the US Treasury, a few blocks away. This is where the globalisation of poverty and the use of debt as a weapon of control was conceived. When John Maynard Keynes, the British representative at Bretton Woods, proposed a tax on creditor nations, designed to prevent poor countries falling into perpetual debt, he was told by the Americans that if he persisted, Britain would not get its desperately needed war loans. More than half a century later, the gap between the richest 20 per cent of humanity and the poorest 20 per cent has doubled; and "structural adjustment programmes" have secured an indebted imperium greater than the British empire at its height.

The danger of the "moderate" view, which refuses to contemplate the sheer rapacity of western state power, is that it can be co-opted. The World Bank and the IMF, now under siege as never before, have devised their survival tactics in relation to this. Overnight, the IMF, the greatest of the loan sharks, has begun to sound like an institutional Mother Teresa, with a "mission to defeat poverty". Together with the World Bank, and the World Trade Organisation, it now promotes "dialogue" with "moderate" non-governmental organisations (NGOs) opposed to globalisation, anointing them as "serious opponents", in contrast to the "hooligans" on the streets.

Clare Short's Department for International Development employs this tactic, co-opting leading NGOs for "consultation", even commissioning them to contribute to government white papers. This collaboration should not be underestimated. Following the successful attack on the WTO in Seattle two years ago, more than 1,200 groups and organisations from 85 countries called for a "moratorium" on further liberalisation of trade and an "audit" of WTO policies as the first stage of reforming it.

The WTO and its creators in Washington were delighted, for its legitimacy was not in question. Yet, this secretive, entirely undemocratic body is the most rapacious predator devised by the imperial powers. The Economist calls it an "embryo world government" - which no one has voted for. Beware of moderates.

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