A Civil Economy: Transforming the Marketplace in the Twenty-First Century

7. Problems in Global Markets

Problems in Global Markets There was a time when cor porations pla yed a ver y minor part in our business affair s, but now they play the chief par t, and most men are the ser vants of corporations. —W oodrow Wilson, “The Older Order Changeth, ” in The New Freedom (1913) The new electronic interdependence recreates the world in the image of a global village. —Mar shall Herber t McLuhan, The Medium Is the Massage (1967) After the collapse of communism, free trade became the mantra of governments and businesses around the world. Since 1991 some 600 changes have been made in the regulatory regimes of countries worldwide to make them more open to foreign trade and investment. The global reach of business markets, however, has given rise to fears that decision-making powers are passing from governments to boardrooms.1 The globalization of markets is therefore critical to understand if we want to anticipate the future of nations and the environmental well-being of the planet. The power of global corporations has grown rapidly because of their capacity to do something nations cannot do—integrate economic resources (technology, production, µnance, marketing) on a worldwide scale. Nations cannot integrate material resources in the same manner; hence, they lose power to global µrms. Global µrms now compete with nations to in×uence the direction of global governance.2 Bennett Harrison of Carnegie Mellon University asserts that the destructive features of global markets are serious. Conglomerate corporations and their allies have gained control over regional and local markets. Global corporations are beginning to determine the future of civil society. Indeed, they threaten the existence of the nation-state with their power to move freely across political boundaries in a way never seen before in history.3 Robert Reich, former secretary of labor, explains how this new global system could have dire consequences. 7 We are living through a transformation that will rearrange the politics and economics of the coming century. There will be no national products or technologies, no national corporations, no national industries. There will no longer be national economies at least as we have come to understand that concept. All that will remain rooted within national borders are the people who comprise a nation. Each nation’s primary assets will be its citizens’ skills and insights. Each nation’s primary political task will be to cope with the centrifugal forces of the global economy which tear at the ties binding citizens together—bestowing ever greater wealth on the most skilled and insightful, while consigning the less skilled to a declining standard of living.4 In this chapter, we illustrate global problems that we propose are due to a lack of regulation in world markets. First, the problems stem from a lack of government regulation. Second, they stem from a lack of civil selfregulation . The absence of these two kinds of regulation can create serious crises. In the µrst section of this chapter, “Civil Problems,” we contend that unregulated global markets are causing the following problems: (1) a downward leveling of public standards in corporate products and markets, (2) destruction of the environment, (3) the global diffusion of a commercial culture, (4) dangerous technological consequences, and (5) the likelihood of recurring µnancial disasters around the world. Our purpose is not to prioritize the problems or attempt to describe their details, nor do we intend to cast blame on corporations themselves. The goal is simply to indicate the serious need for global regulations. In the second section, “The Need for a System of Global Governance ,” we conclude that nations by themselves do not have sufµcient power to regulate global markets; hence, a new path toward international regulation must be developed. We explain why current modes of business self-regulation are not adequate by themselves and point to the need for broader involvement of world leaders. In chapter 8, we will discuss ways to solve these problems through the collaboration of our three sectors: governments , business, and nongovernmental associations. There are more problems than we have space to cover here. The solutions are constructed by applying the theme of this book: Competitors require a common playing µeld with rules based on fairness, justice, safety, and transparency. To maintain market freedom, the solution requires new modes of mutual governance that optimize self-governance. This is the key to a civil economy. 182 A Civil Econom y Civil Problems The growth...