Study Finds Dangerous Rise in Corporate Power
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Study Finds Dangerous Rise in Corporate Power
by Tamara Straus, AlterNet
December 7, 2000
Not since the Gilded Age when John D. Rockefeller dominated
the oil industry and J. P. Morgan served as America's
unofficial central banker has there been so much talk about
how big corporations threaten democracy. Al Gore got on the
bandwagon this summer; wherever the vice president went he
talked about the powerful -- "big tobacco, big oil, big
polluters" -- versus the powerless of the people. And of
course corporate power and its discontents were at the
center of Ralph Nader's run for the presidency.
A critic of corporate power will probably not occupy the
White House in January. But whoever the 43rd president of
the United States is, it is doubtful he will see the issue
go away. According to a September 2000 Business Week/Harris
Poll, between 72 and 82 percent of Americans believe that
"business has gained too much power over too many aspects of
American life" and 74 to 82 percent believe that big
companies have too much influence over "government policy,
politicians, and policy-makers in Washington."
Now, to add to this growing consensus is a new study,
published by the Institute for Policy Studies, a think tank
in Washington, DC. "Top 200: The Rise of Corporate Global
Power" argues that the leading economic story of the last
five years is one of rapid growth of the world's top 200
corporations and diminishment of government and citizen
Perhaps the most important finding of IPS's study is that of
the 100 largest economies in the world, 51 are corporations,
whereas 49 are countries. In other words, General Motors has
greater economic power than the majority of the world's
nation-states, as does Wal-Mart and Exxon Mobil.
The report also provides statistical evidence that combined
sales of the top 200 corporations are bigger than the
combined economies of all countries minus the biggest 10,
and that such sales are 18 times the size of the combined
annual income of the 1.2 billion people (or 24 percent of
the world population) living in "severe" poverty.
"Growing private power has enormous economic consequences,"
concludes the study. "However, the greatest impact may be
political, as corporations transform economic clout into
To learn more about IPS' study, AlterNet spoke with Sarah
Anderson, co-author of "Top 200" and director of the Global
Economy Project of Institute for Policy Studies.
AlterNet: How does the 2000 report on global corporate power
differ from the one IPS published in 1996?
Anderson: One disturbing change is evident in the largest
employers on the top 200 list. In 1995, General Motors was
the biggest, with 709,000 workers. By 1999, GM's employment
had dropped to only 388,000, largely because of outsourcing.
The firm that took GM's place as the No. 1 employer is
Wal-Mart, with a staggering 1,140,000 employees, up from
648,500 in 1995. Whereas a good share of GM's jobs were
unionized and decently paid, Wal-Mart is a notorious
union-buster that employs armies of workers on a part-time
basis to avoid paying benefits. These changes reflect the
overall trend towards fewer and fewer union manufacturing
jobs and the rise in poorly paid, non-union service-sector
Another dramatic development over the past five years is the
surge in economic power of U.S. firms over those in other
countries. Largely because of economic stagnation in Japan
and mega-mergers among U.S. firms, the United States
dominates the top 200. U.S. corporations hold 82 slots,
followed by Japan, with only 41. In 1995, these countries
were virtually tied, with 59 and 58 firms in the top 200,
AlterNet: What do you consider to be the most surprising
results of your research?
Anderson: What surprises most people is not that these firms
have tremendous power, but that their power is so out of
whack with the contributions they make in terms of jobs and
taxes. When I tell people that their sales are the
equivalent of more than a quarter of world economic
activity, they assume that they must provide somewhere near
an equal amount of the world's jobs or taxes. The reality is
that they employ less than 1 percent of the world's
workforce and many of the top corporations don't pay any
U.S. federal taxes at all.
Many people also ask whether the clout of global
corporations is really new. How is this different from the
power of the Rockefellers and the Rothschilds in the last
century? What the report shows is that the concentration of
power among the top 200 firms has been steadily increasing
in relation to world economic activity in general. Between
1983 and 1999, the top 200s' sales grew from the equivalent
of 25 percent to 27.5 percent of world GDP. Yes, we've had
mammoth firms for a long time, but we haven't had this level
of concentration of economic clout on a global scale.
AlterNet: What has the feedback on the report been so far?
Have conservative think tanks, for example, contested your
Anderson: USA Today quoted two people who were critical of
the study. The first was Murray Weidenbaum, former economic
adviser to President Reagan, who pointed out that a large
share of corporate revenue goes to pay for worker
compensation. My response to that is yes, many workers do
depend on wages from these firms, but they are hardly
getting their fair share of the dramatic profit growth we've
seen over the past decade. In the United States alone, CEO
pay grew 535 percent during the past decade while average
worker pay grew only 32.3 percent. And of course many of
these firms are shifting production to low-wage countries,
making the global gap even wider.
The other person they quoted was Michael Santoro, of the
Rutgers Business School. He stated that these corporations
create products that consumers want and that they are "in
general using the resources of the world in a positive way."
Our study doesn't deny that these firms influence our lives
in ways other than by providing jobs and taxes.
Nevertheless, I thought Santoro's statement was a rather
sweeping one to make about a group that includes
tobacco-peddler Philip Morris, major polluters like Exxon
Mobil, companies with questionable environmental and human
rights records like Royal Dutch/Shell and Chevron, and
controversial genetic engineer Novartis.
AlterNet: Given that 51 of the largest 100 economies in the
world are corporations, what conclusions can be drawn about
the state of economic democracy?
Anderson: I think once you understand the extent of their
economic power, it should be no surprise that most
governments in the world have been pursuing policies that
are in the interest of these large corporations. Through the
World Trade Organization, the World Bank, the International
Monetary Fund and also regional trade agreements, large
corporations are getting more and more powers and privileges
to operate as they like around the world.
Meanwhile, workers and communities are not getting any new
powers to fight for their fair share of the benefits of the
globalized economy or to prevent these corporations from
destroying the environment to make a profit. It's a dismal
scenario, but what I always try to remember is that while
they might have the economic power, we have the people. And
as we've seen in Seattle and Prague and many other places
around the world, a new peoples' movement against corporate
globalization is beginning to take off.
AlterNet: In your opinion, what can be done to restore
greater economic egalitarianism?
Anderson: One reason corporations have so much power around
the world is because so many countries are so desperate for
foreign investment and export revenues to pay off their
external debts that they are willing to look the other way
when global corporations behave in socially irresponsible
ways. So full debt relief for the poorest countries is a
The bigger challenge, though, is to rewrite the rules of the
road to globalization. Right now, the rules set by the WTO,
World Bank, IMF and other trade and investment agreements
are designed to benefit large corporations. We need new
rules that will put the goals of environmental
sustainability, reduced inequality and human rights at the
forefront. To create a political climate in which these
types of radical changes would be possible, we also need to
get big money out of politics and to regain the spirit of
monopoly-busting that has been subverted by the goal of
"Top 200: The Rise of Corporate Global Power" can be found
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