Abstract
These two books, although focusing on somewhat different aspects of recent transformations in the global economy, each underline in their own way the rapidly changing dynamics in the organization and structure of international capitalism. Their contents also give testimony that, while important changes are evidently occurring in the geo-organization of capitalism, it is very unclear exactly what these changes are, which among them are determinant and what are likely to be the long-term ramifications of the restructuring of capitalism in terms of the lives of the world’s citizens.
Grahame Thompson has enjoyed a distinguished and diverse career as a critical political economist, notably achieving a prominence if a certain degree of notoriety for a series of sceptical analyses of globalization published in the 1990s and early 2000s, often co-authored with the late Paul Hirst (see for example, Hirst and Thompson, 2002). In these writings, Thompson and Hirst criticized both the exaggerated hype of globalization and raised questions about the desirability of globalization. In relation to the reality of globalization, they claimed that the world economy is not really any more integrated than it was in the period of the great empires leading up to World War One. In terms of the desirability of globalization, they argued that the breaking down of national barriers was likely to lead both to a worsening of the conditions of ordinary citizens, and both economic and political instability.
These themes remain an important subtext in the current work, although in different ways. While, explicitly, Thompson defends his earlier scepticism about the extent of globalization, it seems to me that in his Constitutionalization of the Global Corporate Sphere there is a strong implicit acknowledgement that the nature of global capitalism is substantially different from its earlier manifestations (see p. 39, for example). Specifically, it is the operation of capitalist processes across national boundaries, organized by transnational corporate entities, that creates crucial issues of governance and responsibility in ways that extend beyond the capacity of the single national state to regulate and resolve. Thus, whereas in the pre-global era, many of the inevitable conflicts of economic development were policed by the state in national-level settlements, or sublimated into inter-state rivalries, contemporary transnational business operates beyond both state boundaries and clear structures of accountability. In a sense, then, while Thompson’s earlier general globalization denial is increasingly indefensible (and it would have been refreshing if he had clearly acknowledged this), his concerns about the normative ramifications of globalization are being vindicated, perhaps to a greater extent even than he and Hirst feared 15 years ago. To begin with, the global financial crisis that began in 2007 and from which the world has yet to emerge, demonstrated the instability inherent in an unregulated capitalism. Furthermore, the drastic rebalancing of power in favour of capitalist elites has substantially limited the scope for a humane, social democratic capitalism, to which Thompson is clearly committed.
In Constitutionalization of the Global Corporate Sphere, Thompson focuses on the problematics of the governance of transnational capitalism and specifically the idea of corporate citizenship (rather than constitutionalization as the title somewhat misleadingly suggests). Through six detailed chapters, his analysis begins by examining the reasons for and the nature of the growing juridification of the international sphere. He then explores the rise of corporate social responsibility and the emergence global corporate citizenship (GCC), underlining the much wider ramifications of citizenship, conferring as it does, both responsibilities and rights. Various voluntary norm-setting initiatives are explored, along with the divergent responses of international NGOs towards the voluntary approach; ranging from engagement to critical distance. Thompson carefully outlines the range of quasi-legal forms that govern international corporate citizenship, usefully underlining the tendency for international voluntary regulation to be adopted by state legal systems, for example by companies benefitting from caps on liability if they can show they participated in voluntary codes of conduct and practice (p. 171). Thompson cites a plethora of different spheres of ‘citizenship’, many of which are related to the environment as well as product and process safety. His exploration of the unwillingness of corporations to sign up to codes on human rights suggests that corporate acceptanceof ‘citizenship’ responsibilities is highly selective. Restrictions on transnational corporate activities that are fundamental to the profit generating exercise—specifically the ability to procure labour inputs at low rates—tend to be strongly resisted. In this regard, a more comprehensive exploration of the very extensive scholarly (for example, Pun and Smith, 2007), campaigning, and investigative reporting literature on the various campaigns against sweatshops—and corporate efforts to sidestep responsibility—would have been helpful. Similarly, a more incisive analysis of the ‘whitewash’ hazard—in which standards are merely adopted for Western consumer and government consumption, while dangerous and oppressive conditions continue unabated in offshore production zones, would have strengthened the book and also made it more engaging for the reader.
Thompson’s conclusions essentially propose a compromise with corporate citizenship, whereby corporations are permitted to retain and exercise parallel rights to those of citizens (and in the case of limited liability corporations, greater protection against liability than ordinary citizens possess) while at the same time proposing relatively modest extensions to corporate accountability, for example by limiting the ability of corporations to immunize themselves against liability by incorporating hundreds of subsidiaries each responsible for a small part of overall productive operations. He notes and approves the tentative moves of various national, regional and global bodies towards greater regulation of the financial sector (p. 176), although he does not properly ascribe the motivation for these developments to the public outrage generated by the GFC and the consequent threat to the overall international capitalist system. Overall, Thompson, in common with too many social democratic thinkers, pays little if any attention to the role of grassroots movements in insisting upon corporate accountability; where civil society does raise its head in the book, it is in the avatars of safe, establishment international NGOs like WWF and Oxfam. The problem with this approach is that social democratic reforms are always highly incremental, and internal to the system. This is an appropriate response in periods of stability; however, when the overall structure of international capitalism has been demonstrated to be unstable, as in the GFC, radical change is needed to avoid a downward spiral into generalized disorder as occurred in the wake of the Great depression through the rise of fascism and the outbreak of world war. 1
In general, Thompson pays relatively little attention to the specific organizational features of contemporary transnational capitalism which tend to make an absurdity of the notion of corporate citizenship as any kind of corollary of human citizenship. The dismantling of vertically integrated production systems—the traditional MNC—and its replacement by financialized value chains where much value is realized in offshore havens beyond the reach of tax or regulatory authorities means that while the corporation may market itself as a friendly uncle, it is in practice a hydra-headed phantasmagoric beast that changes form and discourse according to the interests of its beneficial owners. I am irritated each time I pass through London’s Heathrow Airport by the ubiquitous advertisements for the HSBC bank, which commends itself on its global presence and ability to manage local business environments. The advertisements conveniently forget to mention HSBC’s refusal to reimburse its account holders whose funds were frozen in the 1981–1982 Latin American crisis, while the bank itself was raided amid Argentinian government claims it had exported large volumes of high-denomination dollar bills out of the country just before exchange controls were introduced (Treanor et al., 2002; World Bank, 2008: 100). Sikka (for example, 2003), similarly, has written extensively on the multiple personality of international accountancy firms that trade on their global reach while making use of offshore jurisdictions to realize tax free gains and carefully firewalling their national operations so that scandals and their economic fallout can be contained. The very well-known literature on global production chains, of which Gereffi (2005) and Kaplinsky (1985) are merely two of the pioneers, goes unremarked, though global chains are both fundamental to contemporary international capitalism and inimical to corporate responsibility, let alone citizenship.
On a theoretical level, Thompson often canvasses key issues surrounding corporate citizenship, but then tends to retreat from the more radical conclusions towards which those problems seem to point. For example, he acknowledges that corporations are not really comparable with human citizens by invoking a classic argument about whether trees could be citizens (p. 86), but he then goes on to propose ways in which corporate citizenship might nevertheless be made meaningful. Again, he raises but then ignores the most obvious argument against corporate citizenship, which is that corporations are merely a convenient vehicle to organize a combined endeavour of individuals. It can be argued that the primary purpose of the corporate form is to reify this relationship between individuals; and that therefore the corporate citizenship fiction is entirely undesirable. Again, it seems to me that Thompson may be underestimating the capacity of the ordinary citizen to see beyond the veil of corporate identity. While we may well be more inclined to buy a hamburger because a tiny proportion of its price will be donated to a children’s hospice, does this actually mean that we think that McDonalds is a nice corporate person, or is it more because it helps us justify our own unhealthy eating decision? Indeed, in times when severe corporate wrongdoing is exposed, the corporate puppet is rapidly unmasked and embodied in the person of its responsible officers. Two cases in point are those of BP’s Tony Hayward who faced global ridicule for complaining about the intrusion into his personal life he was facing due to the 2010 Deepwater Horizon oil spill, and ‘Fred the Shred’ Goodwin who steered Britain’s Royal Bank of Scotland into a multi-billion pound UK government bailout, and whose vilification culminated in his being stripped of his knighthood in 2012. While it could be argued that in both of these cases the systemic problems of international business were unfairly laid at the hands of single individuals, it certainly could not be claimed that the ‘corporate citizen’ was in any way marketable as an alternative to human responsibility.
In summary, Thompson’s book covers a wide range of topics related to corporate responsibility in a post-national world in an eclectic and often thought provoking manner. He identifies, but too quickly retreats from the real problematics of corporate citizenship; the book would have been stronger if he had paid more attention to more radical critiques of transnational corporate activity. While he does briefly canvass sociological approaches to corporate identity, in which representations are seen as reflective of broader social dynamics and power relationships (p. 32), these approaches do not receive adequate attention. The radical, Marxist, sociological approach is presented only in a dogmatic caricature form (‘here the law is nothing more than the reflection of social tensions as written into all social structures under capitalism. The field of law is a superstructural domain, linked in tenuous but nevertheless determinant ways to the substructure of production relations and exploitation’, p. 33). A more subtle understanding of Marxist social critique would have opened the way for a discussion of corporate identity as a reified commodification of social relationships, while also better explaining the foundations and logics of popular resistance to international corporate hegemony.
Whereas Thompson’s exploration of international capitalism focuses on the formal and informal rules that govern its representation and operation, Georgina Murray and John Scott’s edited collection, Financial Elites and Transnational Business consists of 11 essays aiming to understand the composition and dynamics of financial and corporate elites in transnational capitalism. With the subtitle ‘Who Rules the World’, many of the articles aim to respond to the question of whether there is an emergent transnational capitalist elite, and if there is, how it is composed and structured. The collection of essays is divided between a first group which focus on transnational and global corporate networks, and the second half in which essays focus on national capitalist classes and their links with international business and business networks.
Although like most collections, the essays here diverge substantially both in terms of focus and relevance, two particular themes stand out in a number of the essays; first, the framing of the concept of transnational elite in terms of Robinson’s (2004) theorization of a transnational capitalist class (TCC), and second, the concept of elite networks predominantlyas represented by interlocking corporate directorates, as expounded particularly by Mizruchi (2000) and more popularly by Domhoff (2007). Some of the authors are prominent experts in their own right, including of course the co-editor John Scott, widely considered the doyen of British social class theorists, and William Carroll, a leading Canadian scholar of national and transnational business networks.
Many of the essays take a strongly data-based approach, drawing particularly from various databases of corporate ownership and directorships in order to identify overlaps and thus map networks. Where the data demonstrate striking trends, for example in Peetz and Murray’s exploration of the financialization of global corporate ownership, or suggest caution in assuming a highly integrated TCC as in Carroll’s painstaking exploration of corporate ownership interlocks, this approach can be rewarding. In other essays, particularly the chapters on the European and British corporate elites respectively, the complexity of the statistical modelling can overwhelm the theoretical-analytical content. In the case of Dudouet et al’s essay on the Eurozone, the claims made regarding changes over very short time periods of one or two years seem unlikely to have been driven by structural changes in the organization of transnational capitalism.
The essays on different national elites and their connections with transnational capitalism are of varying importance, with typically too much focus on one or two variables and insufficient attention to the overall structures and dynamics of a ruling class (the book, after all, claims to tell us who rules the world rather than who sits on several boards of directors). The essays by Alexandra Salas-Porras on the Mexican elite, and Jerry Harris on Chinese transnational capitalism are exceptions, perhaps because they seek to understand emerging fractions of a transnational elite, and thus make a real effort to make use of data to support a broader understanding of the dynamics involved in the integration of new actors in international capitalism.
Salas-Porras, for example, makes interesting observations regarding the weaving together of Mexican national political, business and transnational institution elites, creating a social and cultural bridge between nationally organized capitalism and international business norms and management approaches. Her approach is redolent of the pioneering work of C. Wright Mills (1958) in tracing the American power elite of the 1950s, as well as Bourdieu’s thick descriptions of the dynamics of symbolic capital within and across professional fields. In contrast with too many of the essays in the book, Salas-Porras clearly understands that the world is not ‘ruled’ simply by interlocking directorships; indeed were this the case, the evidence in the book is that if anything, there has been something of a decline in integration, partly because financialized corporations govern their value chains primarily through financial targets rather than personal intervention (Ackroyd, 2007; Prechel, 1997).
Perhaps the most interesting essay in the collection is Harris’s exploration of China’s integration within the global capitalist system. Harris, who co-authored with William Robinson the first major article on the TCC (Robinson and Harris, 2000), begins by identifying the complex dynamics involved in China’s integration in the world economy, and similarly of China’s elite with the TCC. He shows that this integration entails negotiation, and that given the fundamental importance of China to the operation of contemporary transnational capitalism,the Chinese elite is in a position to exercise substantial influence on the terms of its integration. He particularly emphasizes the importance of the Chinese state in the country’s economy; it is estimated that 99 of the country’s 100 largest firms have majority state ownership. This importance of the state extends to Chinese outbound investment; China’s sovereign wealth funds (operating through various structures) dwarf institutions such as the World Bank and the Asian Development Bank, and are making decisively large investments across the world in close integration with major Western financial capital. Particularly in the United States, there is some political disquiet at the rapid growth of Chinese state controlled or dominated FDI within the transnational economy, and some high profile buyouts have been blocked. However, as far as the major asset managers and financial institutions are concerned, with which the Chinese state dominated investment vehicles typically do business, the source, ownership structure and even the ultimate investment motive of their partners is largely irrelevant; these funds simply allows them to leverage themselves into even bigger plays. More speculative, and less convincing, is Harris’s discernment of broad ideological divergence between different factions of China’s state capitalist hierarchy, between more neoliberal and more neo-Keynesian approaches. The former emphasizes China’s role as the world’s low cost assembly line, and the latter China’s need to develop a strong consumer-oriented working-middle class in order to create its own internal demand for Chinese products. Although undoubtedly differences do exist, the secondary, non-Chinese language sources Harris uses are inadequate to make such broad generalizations.
Overall, the findings of many of the essays seem to chime with Carroll’s caution regarding the demonstrability of a tightly interconnected transnational capitalist class. As we might expect, the GFC has been marked by a retrenchment of the financial sector and a general tendency to international business dis-integration through withdrawal to home territories. Despite Murray’s strong arguments in her concluding chapter regarding the inequitable nature of transnational capitalism and her refreshing insistence on identifying growing power imbalances within global capitalism as morally repugnant, much of the book’s evidence does not support the hypothesis of growing transnational class integration.
Does this mean that the hypothesis of a transnational ruling class is incorrect? I would argue not, but that the methods largely used within the book to identify integration are often inadequate and even ill-considered, and derive from a narrow or inaccurate view of what a ruling class is, and a considerable underestimation of the importance of shared ideology in creating a class ‘for itself’, as Marx underlined. A ruling class, in Marxist terms at least, does not presuppose particular relations between individuals or even between organizations. A ruling class is not a conspiracy, but rather a fraction of economic actors who exercise control over the means of production and are in a position to capture surplus value generated through the operation of the value production process. It is not necessary for individual members of this class to share interlocking directorates or ownership of corporate assets. As in the case of the Chinese state capitalist class, it is not even strictly necessary for them to possess justiciable control over the means of production, although their ability to oversee and direct the operation of the value chain, and to benefit directly and/or indirectly from generated surplus value is a key characteristic of a ruling class. In terms of the global economy, there are practical, physical limits to the personal interlocking control of productive assets across 200 countries around the world. It is important to acknowledge that severe political differences can exist between different national and regional fractions of a transnational capitalist class, even to the extent of lining up on different sides in a physical war, as occurred throughout the 20th century and to the present day. But does this mean that a global TCC cannot exist? Not at all.
What, then, glues together a disparate and geographically dispersed ruling class and permits it to ‘rule’? At the most basic level, of course, there is common interest. Elites share a common interest in continuing to enjoy the fruits of others’ labour; these interests are instatiated in a variety of ways ranging from the direct, such as a mutual commitment to limit the power of trade unions to the more indirect development of common cultural habitus. These common interests are underpinned more fundamentally, especially in the era of global capitalism, by a common ideology that justifies both the operation and the evangelization of transnational capitalism; that of neoliberalism. Although neoliberalism purports to reflect an apolitical marketization, in practice it is the preservation of monopoly power of the ruling elite, and the atomization and exploitation of subaltern classes. This decidedly political economy of neo-liberalism is present in all of its interventions but was emblematically manifested in the developmental stage of neoliberal ideology in von Hayek and the Mont Pelerin Society’s opposition to the ‘monopoly power’ of trade unions while they simultaneously defended the ‘freedom’ for capital to operate through monopolies (Plehwe, 2009).
Neoliberalism, an ideology that preaches the sweeping away of barriers to ‘efficiency’, is the apposite ideology for global capitalism, justifying and mandating the transnational organization of production, and the concentration and distribution of economic power across national boundaries and beyond the regulation of the state. Although the earlier phase of imperial capitalism was characterized by exploitation of both colonial resources and colonial labour, neoliberal capitalism integrates most of the world’s population into a labour market in which corporate elite power predominates, enabling the application of global labour arbitrage and the extraction of enhanced levels of surplus value across both developed and developing countries, and where much of the enhanced surplus can be realized in tax havens beyond the sway of state tax authorities. The GFC demonstrated the extreme instability of transnational neoliberal capitalism (Davis, 2009), because of its dynamiting away of national firewalls and its dependence for effective demand on the imposition of unsustainable levels of consumer debt in Western countries, while wages in the ‘emerging’ economies remain repressed in order to maintain profit levels. Nonetheless, the logical inertia of neoliberal capitalism forces it forward through ever more drastic ‘market reforms’ that in the short term continue to deliver short term profit while undermining long-term systemic sustainability.
This is where the complementarities of the two books under review can be tied together. On the one hand, Thompson’s exploration of the ‘constitutionalization’ of transnational corporate operations demonstrates the efforts of corporate elite interests to avoid the obvious corollary of global markets—global regulation—through a range of stitched-up, elite-dominated voluntary pseudo-accountability processes. The disingenuous character of these transnational norms is understated by Thompson, whose proposals for tightening (self-)regulation are hampered by his failure to situate the emergence of global ‘constitutionalization’ in a sociological context of transnational class dynamics, and his ignoring of any potential for a transnational Polanyian ‘dual movement’ of resistance towards transnational corporate domination. On the other hand, the strongest articles in the Murray and Scott collection on transnational elites articulate some of the processes through which transnational elites are formed, and particularly the incorporation of new emerging economy elite cohorts into a global ruling elite. What is missing from both accounts is how neoliberalism acts as an ideological thread that runs both through the thinking behind the global corporate citizenship discourse described by Thompson, and as an organizing and motivating principle for the growing integration of the world economy under the hegemony of an ideologically if not geographically assimilated transnational ruling class.