'The growth of the influence of the TNCs represents the emergence of a global culture of power without responsibility' (Discuss) A Transnational Corporation (TNC) is a company that operates in more than one country. The headquarters usually tend to be located in a 'first world' nation (though recently there has been an increase in headquarter locations in Newly Industrialising Countries such as Singapore). Much of the production for the company is often done in 'third 'world' countries, which welcome the TNCs, although much poorer wages tend to be paid to workers in these locations.
Thus TNCs are rightly characterised as large, highly sophisticated organisations, richer than most countries and at times more powerful than many governments. A good example of a TNC is the sportswear/fashion company Nike where its headquarters are in Oregon, United States, however the entire manufacturing process is carried out through independent subcontracting in South East Asia – nations such as Indonesia with all financial decisions and research / development carried out in USA.
The Nike brand is globally renowned and products can be bought in Europe, Africa, South America. Nike is the manufacturer of football strips of teams across 5 continents. Nike can be seen as a typical example of a TNC basing its organisation on the core-periphery model and also highlights the division in labour worldwide. For example production workers in South East Asia lack any wage security whereas American workers are given full benefits such as sick pay etc. In 1999, according to the Institute for Policy Studies, 51 of the world's 100 largest economies were corporations.
To put this in perspective, General Motors is now bigger than Denmark and three-and-a-half times the size of New Zealand; the top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 10 It can be argued that last twenty years, Transnational have acquired unprecedented economic, financial and political power. Markets and capital globalisation, which has been mostly profitable to these companies, has allowed for further concentration of their capital and production means, creating political situations.
Their activities cover all sectors. They can choose where and how to produce and to stock up, and where and how to sell their products. This has often led to what many critics see as a having the power but without the responsibility. According to Cohen & Kennedy (2000): 'The primary social criticism of TNCs is that they exercise power without responsibility. In theory the power of the state is restrained by the due process of law, by regular elections, and by the capacity of people to organize, demonstrate, advance their views and defend their interests.
'1 According to the organisation Corporate Watch2, in the eyes of the law the transnational company is seen as a personified 'persons' with many of the same rights as flesh-and-blood humans. Corporations can claim and have done in the past, for example, the right to freedom of speech, the right to sue, the right to 'enjoyment of possessions'. They even have a number of advantages, for example corporations can be in two or more places at once and can divide themselves to avoid liability for their crimes.
It is normal, for example, to transfer ownership of a dangerous cargo to a distant subsidiary while the cargo is at sea, so the parent company is not liable if it causes a toxic spill. Corporations are well prepared when things go wrong as they have the ability or rather the wealth to afford the best lawyers. For example in 1989, an oil taker, the Exoon Valdez, owned by then the largest petroleum company in the world, struck a reef in Prince William Sound off the Alaskan coast, causing the largest oil spill in history.
Nearly 42 million litres of crude oil polluted the beaches, contaminating fishing and destroyed wildlife. Company directors are legally obliged to act in the best interest of their shareholders for instance make them as much money as possible. Genuine efforts to sacrifice profits in favour of human rights or environmental issues is often seen as a suicide move. If a company director decided to opt for a more humane and environmental friendly policies their share prices probably would fall and be shunned to the sideline by one of its competitors.
According to Corporate Watch transnational corporations want us to believe that they "are the pinnacle of economic evolution"3 and that we as a consumer society must allow them to sell us their products. Corporate Watch is a radical research and publishing group, based in Oxford, UK. They as an organisation do not subscribe to any rigid ideology like Marxism or neither do they claim to be anarchists or socialists. There core belief is simply that society should be run in the best long-term interest of all human beings and other species – not for the short-term gain of transnational corporations.