Should we trust our Governments or private sector? What is a true liberal democracy? Although it appears to be about free markets, in reality neoliberalism is obsessed with the power over public life of the giant corporation which is an urgent issue in the global political economy today. It is no secret that large corporations caused the financial crisis of 2008 and yet, oddly enough, they increased in wealth and power from it- obviously at everyone else’s expense!
Why do giant firms have so much influence on the decisions of government? This undemocratic feature of neo liberalism has really effected the global political economy in certain ways.
Many have pointed out that giant firms possess too much power, especially lobbying powers. Arguably, firms whose donations are of growing importance to money hungry political parties and politicians have really altered how things play out. Their contribution can make a difference, ‘The more that government becomes involved in the economy, the greater the range of issues where corporate power can be politically deployed, therefore they argue, reduce the economic role of the government, and the problem will be reduced. (Crouch, 2011).
Robert Riech, the former secretary of labour during the Clinton Administration, has described the US lobbying system in his book “Supercapitalism” (2008), he talks about the growing inequality, increased job insecurity and corporate corruption as negative features that can be traced back to successful lobbying. There has been many US scandals involving corporate lobbying e.g. Lobbyists had persuaded congress to pass a legislation permitting a firm to audit the accounts of the cooperation, which has been formerly illegal because it might let audit firms to keep quiet about irregularities they found in corporate accounts, and therefore not lose lucrative contracts, which is indeed what happened, obviously the secret couldn’t be kept and many senior executives found themselves in prison.(Crouch, 2011) Thus demonstrating how easy Giant firms can influence government policy. (At least this gives us hope on the American justice system, right? No? Okay then.)
Lobbyists also got their own way when it came to Obama’s healthcare reform policy. It was no secret that the US health industry were against Obamacare. It was reported by the Guardian that the US health insurance firms, pharmaceutical corporations and hospitals ‘deployed six lobbyists for each member of congress and spent $380 million campaigning against the policy’. By
campaigning just paying for the re-election funds of sitting congress-persons (sounds a tad bit bribe-ish if you ask me).
However, it is important to recognise that the USA is not only vulnerable to corporate lobbying. The lobbyist also had their own way when it came to the European Parliament policy making decision about food labeling, which was initially designed to give consumers further information on the health risks associated with certain ingredients. Despite their clear preference for coloured graphics, 11 leading food and drinks manufacturers lobbied heavily in favour of the black and white print. The The Independent Newspaper reported, how corporate lobbyists outnumbered those of consumer associations by a hundred to one. And surprise surprise, Parliament voted in favour of the lobbyists. Yes, unfortunately they won again.
In conclusion, there is a clear corporate takeover of the Market as well as many Government policies. This is a clear issue as it demonstrates how easy a Giant firm can influence and arguably, hijack a government and pursue its own interest without thinking about the consequences to its consumers and citizens. Are TNCs and their ruthless strategies involving manipulation, corruption and bribery to get what they want a threat to democracy? Or is this just a norm in the Global Political Economy?
By Fahima Hamid
Crouch, C. (2011). The strange non-death of neoliberalism. Cambridge, UK: Polity Press.
Reich, R. (2007). Supercapitalism. New York: Alfred A. Knopf.
McGreal, C. (2009). Revealed: millions spent by lobbyists fighting Obama health reforms. [online] the Guardian. Available at: http://www.theguardian.com/world/2009/oct/01/lobbyists-millions-obama-healthcare-reform
Martin Hickman, C. (2010). Laid bare, the lobbying campaign that won the food labelling battle. [online] The Independent. Available at: http://www.independent.co.uk/life-style/food-and-drink/news/laid-bare-the-lobbying-campaign-that-won-the-food-labelling-battle-2003686.html