MICHAEL THORN. Corporate power unchecked: Time to redress a dangerous imbalance

Are corporate interests too powerful? Are vested interests beyond democratic control? Are our political institutions even concerned to do so?

A recent edition of Four Corners Tipping the scales (30 April 2018), focused on Australia’s growing obesity problem and its dramatic impact on Australia’s health. The reporter Michael Brisenden told the story of the rapidly increasing number of Australians who are overweight and obese and the diseases that accrue.

He reported on the opportunities to prevent this growing catastrophe and inevitably was led to ask questions about the powerful interests completely opposed to proven scientific recourses, such as a health levy on sugary drinks and advertising restrictions.

In a follow-up story in The New Daily (Big Sugar and the ‘big flaw’ in Australia’s federal health programs), Brisenden focused on the behaviour of powerful corporate interests like Coca-Cola, Pepsico, Unilever, Nestle and Kelloggs who have worked assiduously to frustrate the adoption of these policies. Other unhealthy commodity industries – alcohol and gambling – behave similarly.

Stephen Wilks is a Professor of Politics at the University of Exeter who has studied and written about political power of corporations since the 1970s. In his 2013 book The Political Power of the Business Corporation Wilks writes in his preface:

‘when I first became intrigued by the power of business corporations, and particularly by their ability to wrest concessions from national governments, it seemed perfectly possible to bring these concentrations of economic power under democratic control. Now I’m not so sure. It seems to me that many of the democratic gains fought for so heroically over the last 150 years have simultaneously created a set of nominally economic forces which have emptied many of those gains of real meaning. The truly worrying prospect is that those forces…have created new autocrats, immune from effective popular control.

As he says ‘this is not news’ Kenneth Galbraith and Charles Lindblom wrote extensively in the 20th century and provided many insights about how to manage the power of corporations.

If you want to get a feel for the relative size of these transnationals have a look at the 100 biggest economies and see how the world’s biggest rank against nation states. The US is the world’s biggest economy at $3,251 billion. Australia is ranked 12th at $426 billion. Among the corporations Walmart comes in 10th ($482 billion), Shell 18th ($272 billion) and Apple 25th ($234 billion). Of the world’s top 100 economies, 69 are corporations.

These corporations have become a feature of our economic world and our daily lives. Some are regarded as benign, others regarded more fondly – Apple, others not quite so – banks. Google and Facebook – mixed feelings perhaps?

Powerful transnational corporations emerged as joint stock companies in the 17th century. The Dutch company Verenigde Oost-Indische Compagnie (VOC) or the United East India Company was the mother of them all. Its commanding presence across the globe lasted for more than two centuries making it arguably the world’s first multi-national corporation.

Modern day transnationals may not resemble the VOC, but the way today’s corporations combine political and commercial power is indeed the same. As Russell Shorto writes in his book Amsterdam, they may not be obliged ‘to wage war on behalf of the Dutch Republic…to have authority to build and maintain military forts and…to impel foreign leaders and populations to trade with it’, but their behaviours are akin to the VOC. They wield their power, at time ruthlessly, and pose serious challenges for pluralist societies.

Wilks says that the conventional pluralist view that business corporations are subordinate to the political process and to elected government is a conceit. He argues that instead the state and corporations co-exist in a system that bias’s politics towards business interests. And this bias runs deep. He says corporations have more influence within democratic process than do voters.

Neo-liberal, market-oriented economies have tended to acquiesce to corporate power. Competition policy, deregulation, privatisation and outsourcing has strengthened the hand of corporations and increased the risks of perceived and real undue influence on the political class.

The implications for democracies and the public interest are serious. Historically governments have placed checks on corporate power, but over the years, these constraints have waxed and waned, been whittled away or just plain circumvented.

In the sugar tax story there is of course another actor – Big Sugar – and it acts in concert with sugar growers, sugar producers and ‘their’ political party the National Party.

There is no public interest just political interest: and no one understands this better than the National Party.

Tipping the scales revealed the tobacco industry-like tactics the food and sugar industries use to stave off government intervention in the public interest to arrest Australia’s chronic obesity problems. They merchandise doubt about the public health prescription for action: casting doubt about the science (and increasingly the economics), casting aspersions about scientists, and of course influencing the political agenda.

The contempt these corporations have for civil society can be breath taking.

But it’s not all one way.

Australia’s corporate tax dodgers are being progressively exposed by the work undertaken by the likes of the Tax Justice Network Australia and Michael West.

The Banking Royal Commission has uncovered illegal behaviour and sharp practices that has confirmed what many already suspected and shows the value of major commissions of inquiry, which combine clever people with tough investigative powers, to expose abusive behaviour.

Of course, the Business Council of Australia is not taking this laying down. It has passed around the collection plate to rustle up a $25 million for a fighting fund to press for further corporate benefits and remind the political class who’s the boss.

The prolific lobbying by unhealthy commodity industries is well known. At the recent PHAA Health Prevention Conference in Sydney (2-4 May 2018) it was reported the tobacco industry employs 20 direct and 14 indirect lobbyists, alcohol 43 and 23, junk food, 33 and 13, and gambling 31 and 16. Does public health employ any lobbyists?

To redress the imbalance requires mechanisms to increase transparency, regulatory officials who won’t be intimidated, and legislation to stiffen penalties to discourage poor behaviour and punish offenders heavily.

Greatly enhanced lobby registers are required. Registers that provide real time information about who these vested interests seek to influence. And while we are at it sanctions against the public service which repeatedly undermines the country’s freedom of information laws.

Commissions of inquiry, used judiciously, are powerful vehicles for targeting corporate malpractice. With strong investigative powers they can go places others cannot and frequently will not.

A federal corruption commission, read ICAC, is sorely needed. Proposals are on the table and one cannot be too far away now that Labor is supporting its establishment

Banning corporate political donations (both direct and indirect) is much needed. When it comes to donations there is always a price to be paid.

In the case of public health, adherence to the World Health Organization’s policy that corporate interest should not be involved in the formation of public health policy would be a good place to begin. As Jane Martin said to Four Corners ‘Industry should be consulted around what policies should be implemented, but they shouldn’t have a role in deciding what they are’.

Wilks has a long prescription for reform. He accepts that ‘the exercise of corporate power is an everyday feature of life in advanced industrial societies’. He argues for broad change ranging from the incremental, through revolutionary to institutional change.

But his prescription relies on political elites to be less enamoured of corporate privilege and to make large corporations ‘more accountable, less destructive and better able to contribute towards human fulfilment’.

Who would disagree?

MICHAEL THORN, Chief Executive, Foundation for Alcohol Research and Education  

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2 Responses to MICHAEL THORN. Corporate power unchecked: Time to redress a dangerous imbalance

  1. Ian Webster says:

    The public’s health has to won in the democratic contest of ideas and policies and the distribution of resources whereas corporations win by profiting shareholders, vested interests and political alliances. As Michael says, it has always been an unequal contest and the future looks pretty bleak, unless large corporations can be held to be “more accountable, less destructive and better able to contribute to human fulfilment’, health and welfare.

    Thanks for this fine piece, Michael.

  2. Peter Sainsbury says:

    And add to all of the above the so-called ‘free trade’ agreements, really ‘corporate-power-building’ agreements. It’s the corporate lobby groups – big oil, big pharma, big sugar, even big health care – who influence the content of these trade agreements and determine their ultimate outcomes: fewer government regulations and free-er markets but few if any worthwhile benefits for citizens (or as corporations and governments increasingly prefer to call them consumers) or even the nation states involved. The inclusion of Investor-State Dispute Settlement (ISDS) provisions in free trade agreements brings this to its zenith whereby corporations can sue governments and be awarded massive financial damages for loss of profit in kangaroo courts if governments introduce regulations that protect their citizens’ health, workers’ rights or the natural environment. The problem is not that corporations have too much influence on political parties and governments, it’s that, as alluded to by Thorn, it’s becoming increasingly difficult to see any separation of government and business.

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