October 23, 2017

Gaia and the global corporations (extended version)

This is an extended version of Edward Goldsmith’s talk presented at the “Policing the Global Economy – why, how and for whom?” international conference, held in Geneva, 23-25 March 1998, and presented again as the keynote address at the International Forum on Globalization in April 1998.

This extended version was published in Caduceus magazine issues 42 and 43, winter 1998 and spring 1999.


Modern man is wrecking the planet and doing so at an increasingly rapid rate. Our remaining forests are being systematically clear cut or simply burned, our agricultural land compacted, eroded, desertified or water-logged and salinized by modern irrigation methods, our waters contaminated with agricultural and industrial chemicals or slowly depleted with the growing cultivation of water-intensive cash crops, our rivers turned into open sewers, or transformed into torrents that only flow during the rainy season, our wetlands drained, our coral reefs grubbed up or poisoned, and just about everything contaminated with as many as a hundred thousand different chemicals, only 5 percent of which have even been tested – and in a very summary manner at that – for their toxic effects on different forms of life.

What, we might ask, is leading us to destroy, in so systematic a manner, the very planet on which we depend so intimately for our livelihood and indeed our very existence?

Of course the population explosion can be incriminated, but it is not a spontaneous phenomenon. On the contrary, it can be shown to occur in but very specific conditions – in particular during periods, of social and economic transformation, such as that during which we are living today, when cultural patterns into which are built, among other things, highly effective population control strategies, necessarily disintegrate.

Indeed the real cause of the pervasive environmental destruction of today is economic development, and unfettered trade which serves to maximize development and to which all considerations today, however important, are ruthlessly subordinated.

Development involves methodically destroying the real world or the world of living things in order to substitute in its stead a totally different world; the surrogate world or world of human artefacts – that which most favours the maximization of GNP – and hence, it is misguidedly considered, human welfare.

The idea that development, on the contrary, provides a universal panacea to all our problems has been attributed to US President Harry Truman in a speech he gave in 1949. The term is a clever one. It is derived from biology and suggests that economic development is a natural process like the development of the embryo in the womb, suggesting thereby that if Third World countries are poor it is because they are at an earlier stage in this natural process and that it suffices for them to progress to a more advanced stage for them to be rich, as we are in the West.

Truman may well have been the first person to use the term in exactly this way but the idea itself is an old one. Indeed what development seeks to achieve today is just what the colonial nations sought to achieve in the late 19th century and continued trying to do so until the second world war. Cecil Rhodes, Britain’s most famous promoter of colonialism in the 19th century, put it thus:

“We must find new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labour that is available from the natives of the colonies. The colonies would also provide a dumping ground for the surplus goods produced in our factories”.

Of course, this is precisely what globalized development seeks to achieve today. The notion that this could not be achieved by military means as in the past was clear to governments and corporate leaders in the West well before the end of the last war, so instead they determined to achieve it by economic means, i.e. by persuading, or if necessary forcing, Third World countries to “develop”, bringing them in this way into the orbit of the Western industrial system.

It was at Bretton Woods, a holiday resort in New Hampshire, that these people gathered in 1944 to work out how this could best be done. The answer, they decided, was to set up three key institutions:

  • The first was the World Bank. Its role was to fund the infrastructure (roads, power stations, airports, harbours) required by Third World countries to enable them to import and distribute Western manufactured goods and at the same time to export to us the cheap raw materials that we required.
  • The International Monetary Fund (IMF) was the second of these institutions. Its role was to provide funds to Third World countries that were experiencing Balance of Payments difficulties, which they would inevitably do as it is not all that profitable, at least in the short-term, to fund all this infrastructure.
  • The third institution was to be the International Trade Organization (ITO), whose role was to make sure that Third World countries did not set up quotas, import duties, and other barriers to trade which would prevent us from exporting our surplus goods to them.
        The ITO was never actually set up as the US Congress regarded it as a threat to US sovereignty. However, in 1948 an informal body, the General Agreement on Trade and Tariffs (GATT) was created to fulfil the same function. After the signature of the last GATT agreement, however, GATT has been largely replaced by the World Trade Organization (WTO), which was literally smuggled in at the last minute.

These three bodies are known as the Bretton Woods institutions. They are largely controlled by America and other rich countries. They have spearheaded a massive enterprise of economic colonialism which has caused havoc to the culture and the livelihood of the vast majority of Third World people as well as environmental destruction on a hitherto unknown scale.

The collapse of the South American economies in the early 1980s vastly increased the hold exerted by the IMF and the World Bank over the economies of Third World countries. This they have done by forcing grossly indebted countries to accept “structural adjustment loans” (SALs) on condition that they accepted “structural adjustment programmes” (SAPs).

This involved and still involves opening up their economy to foreign investments and imports of all types, cutting down on “unproductive” expenses such as education, welfare and food subsidies, transforming their economies so that they became totally geared to exports, while at the same time devaluing their currencies so as to make their exports more attractive.

Not only have these programmes caused the most terrible poverty, misery, and malnutrition, not to mention ecological destruction (by massively increasing the production of environmentally destructive cash crops) but they have turned the very principle of democracy, to which Western countries are supposed to be so totally committed, into a veritable charade.

Indeed, whenever a Third World country accepts a structural adjustment loan and hence the imposition of a structural adjustment programme, it has in effect delegated the task of running its economy to a foreign, non-elected body sitting in Washington DC. That is hardly democratic.

As Mr Nyerere, when Prime Minister of Tanzania, once said, “I have the authority but I do not have the power”. Nor do the governments of all those countries that join the WTO, for the first article in its Constitution states that all member governments must adapt their laws to those of that organization, which has thereby set itself up as a sort of world government whose laws have total precedence over those of its member nation-states.

Needless to say, if the Multilateral Agreement on Investments, that is at the moment [1997] being frenziedly promoted by the OECD, were to be adopted, we would have strayed still further, if that is possible, from all known democratic principles. Indeed the OECD proposes that it be made illegal for national governments to pass any new laws, (many of which could have been enacted to protect local communities, local economies, the standard of living of our citizens, their natural environment, and their health), if this leads to a reduction in the profits of any transnational corporation.

Already the Ethyl Corporation of America has (with a measure of success) sued the Canadian government for $250,000,000 for having passed a law that reduces that corporation’s profits by banning a toxic additive to petrol that it manufactures.

This perfectly outrageous treaty does more than subordinate the authority of national governments to an international agency, it subordinates it to the interests of individual transnational corporations. A less democratic proposal is hard to imagine; what is more, under these conditions, the protection of what remains of our natural environment is simply not conceivable.

For instance, the much touted Earth Summit held at Rio de Janeiro in 1992 was sabotaged by the Business Council on Sustainable Development (BCSD), [now the World Business Council on Sustainable Development (WBCSD)], and the International Chamber of Commerce (ICC). The founder and Chairman of BCSD largely financed the conference himself. Representatives of the two organizations were present and very active at each of the ‘prepcoms’, (preliminary meetings held before the official Conference).

What they succeeded in achieving was to remove from the agenda all those issues which would have been of embarrassment to the transnational corporations such as the huge contribution of the TNCs themselves, the impact of international trade that they largely control on the natural environment, as well as such issues as energy, nuclear power, and industrial agriculture.

Pressure from the BCSD also led the Secretary General of the United Nations to close down the United Nations Centre on Transnational Corporations (UNCTC) that had worked for 14 years developing a code of conduct for TNCs, on the grounds that the creation of the BCSD had made that organization totally redundant.

The TNCs also succeeded in establishing the principle that the only acceptable solution to global environmental problems was “sustainable development” and that this, incredible as it may seem, could only be achieved by maximizing economic growth, which in turn required the maximizing of international trade to which goal all other considerations had to be subordinated – as indeed they have been with the passing of the last GATT agreement in 1994.

As if this were not enough, a new environmental agency was set up at Rio, the Global Environmental Facility (GEF) and – in principle at least – it was heavily funded. However, instead of being handed over to a management team with serious environmental credentials, it was, in effect, made little more than a subsidiary of the World Bank – an organization that has spearheaded the funding of environmental destruction throughout the Third World.

Admittedly the World Bank was supposed to involve two much smaller agencies, the United Nations Development Programme (UNDP) and the United Nations Environmental Programme (UNEP) in its management. Predictably, however, these relatively paltry organizations were rapidly marginalized, and the main activity of the GEF today is to fund measures that serve to reduce the destructiveness of World Bank projects – which of course should be funded by the World Bank itself (to the extent that this institution should be allowed to continue funding destructive projects in the first place). The other achievements at Rio, such as Agenda 21, are relatively harmless besides being grossly underfunded, and are not seen as threats by the TNCs.

In the meantime the setting up of an effective environmental agency has not even proved possible in any of the regional institutionally-managed free-trade zones we have set up in recent years: the European Union for instance. In The Ecologist we have documented in great detail the EU’s policies on education and transport. Neither are determined by the European Commission, let alone the European Parliament, but by the European Round Table, made up of the CEOs of the biggest transnational corporations operating in Europe. What is more, there is every reason to suppose that the same is true with regards the determination of policies in other key areas such as agriculture and environment.

Even at a national level, an effective environment agency has yet to be set up. The Ministries of the Environment that now exist in most European countries do very little. They are invariable forced to toe the government line on all major issues. Anything they propose that adversely affects the government’s economic priorities is automatically rejected, as has recently been so well documented by France’s last Minister of the Environment, Corinne Lepage, in her book “On ne peut rien faire Madame le ministre” (we can do nothing, Minister).

As far as I know, the only environmental agency with any executive powers at all is the Environmental Protection Agency (EPA) in the USA, which has a budget of seven billion dollars. However, this is but a minute fraction of what it would need to control the environmentally destructive activities of the vast transnational corporations it was set up to control.

Thus, among its duties is to examine the 70,000 or so chemicals, already marketed in the USA, for their potential adverse health effects, as well as a 1,000 or so new ones that are put onto the market every year. But after many years it has only succeeded in examining – in a cursory way at that – little more than about 5 percent of these chemicals; 95 percent of those that are still on the market have thus never been tested at all – a truly horrifying thought. What is more, when it does establish that a particular chemical is carcinogenic, the EPA is incapable of forcing the corporation that produces the offending chemical to take it off the market. All it can do is negotiate with it and from a position of weakness rather than strength.

Let me give you an idea of its weakness. According to the law, if studies undertaken by a corporation reveal that one of its products has serious health effects on people exposed to it, the EPA must be informed within a given period of time. Failure to do this results in fines that increase every day so long as the information is still withheld. The EPA, knowing that many such studies were being carefully kept under wraps by the corporations involved, and knowing that it did not have the power to enforce the law, offered the corporations a drastic reduction in the fines they should incur for withholding this critical information if they handed it in before a certain date.

To the EPA’s amazement, as many as 11,000 sets of such dissimulated studies were dispatched to them in all haste so as to take full advantage of the partial amnesty. Under such conditions it is perfectly clear that the EPA cannot possible offer an assurance that any chemical on the market is harmless. Nor is there any chance whatsoever of its being able to set any serious acceptable standards for exposure to any chemical on the market. What is more, this will remain the case till the EPA is made powerful enough to control the otherwise uncontrollable chemical and pharmaceutical giants that have at their disposal limitless financial power – but this will never happen.

If no institution can control environmental destruction and protect the public’s health at a national level, what chance is there of setting one up at an international level? If we look at the experience of the United Nations Environment Programme (UNEP), we can see how hopeless the task really is. The UNEP, which was set up after the United Nations first Conference on the Environment in Nairobi in 1972, was given no executive powers of any kind. It could only act via other United Nations agencies, and to reduce its capacity to do so it was conveniently located far away from them in Nairobi, and, what is more, given an annual budget of a mere $70 million – a third of that of an NGO such as the World Wildlife Fund.

In any case, the problems we face today are too massive and too deep-seated to be solved by any institution. Environmental destruction, in spite of assurances to the contrary by scientific experts working for governments and international institutions, is entirely out of control. For instance, there is absolutely nothing today to prevent the ever increasing destruction of the world’s forests – that is until it becomes ‘uneconomic’ to destroy any more.

Nor can I can see anything to stop the erosion of the last inch of topsoil from what remains of the world’s dwindling agricultural land so long as there is a market for its produce. Nor, in spite of the World Climate Conference in Kyoto in December 1997, is there anything to prevent the further growth of CO2 emissions to the atmosphere and the further destabilisation of world climate, that is so long as there is a market for fossil fuels.

Let us face it, there is no law in any country – to my knowledge – that makes it illegal to clear-cut forests, nor to erode our topsoil, nor to generate greenhouse gases over and above that which can be absorbed by dwindling natural sinks. What is more, even if such laws were enacted, I can see no effective mechanism anywhere in the world for applying them.

At the recent World Climate Conference at Kyoto, governments committed themselves to reducing carbon-dioxide emissions by 5.2% below the 1990 level by the year 2008-2012. Whether they actually do so or not is largely irrelevant. The scientific working group of the Intergovernmental Panel on Climate Change (IPCC) told us in its first report in 1990 that in order to stabilize world climate we would have to cut down emissions of greenhouse gases (of which carbon dioxide is the most important) by 60 percent to 80 percent, and do so immediately not in 20 or 30 years time. If, on the other hand, we did nothing, the world would become on average 1.5ºC to 4.5ºC degrees hotter by the time the carbon dioxide content of the atmosphere doubled, which should be around the year 2020 and 2030.

Few people seem to realize what a truly terrifying thought this is. Man has never lived in a world that is 4.5ºC hotter. In addition, what we are seeing today is not just global warming but global climatic destabilization with an increase of droughts and floods, of heat and cold, and also of the unpredictability of weather conditions, which will make agriculture, in particular, increasingly difficult.

What is more this is only the beginning. As governments have in the meantime done practically nothing to reduce emissions, it will now be impossible to prevent the doubling of the CO2 content of the atmosphere. All we can do now is slow down any further change, and slowly at that. But is this enough, and are we even going to slow it down? Who is going to make us do it, especially against the massive opposition from the incredibly powerful oil lobby?

The answer is no one. A mere 5.2 percent reduction below the 1990 level by the year 2008-2012, would have but an insignificant effect on global warming, which will just keep increasing at an unpredictable rate, especially in view of all the likely positive-feedbacks – (i.e. small changes that can lead uncontrollably to ever bigger and bigger changes) – changes that being speculative and unquantifiable are very difficult to take into account in the mathematical models built by the IPCC.

In any case even if we succeed in adapting, at least in certain areas of this planet, to a world that is four and a half degrees hotter, can we adapt indefinitely to a world that is growing increasingly hotter than this, and whose climate is becoming ever more destabilized? The answer is a very definite no.

If environmental destruction is out of control, what then is likely to happen? Clearly something must in the end bring it to a halt. It cannot just continue increasing for ever. In all probability economic collapse will do so. Walden Bello – the Filipino economist, who noted in great detail the weaknesses of the highly-touted ‘miracle’ economies of the Far East in his book “Dragons in Distress” more than ten years ago, believes that the breakdown of the South American economy in the early 1890s, the collapse of the Mexican economy of 1993, and that of the Far East and Russia which we are witnessing today, will necessarily be followed by other collapses, possibly that of South America, and ultimately that of the USA.

For him this is merely a matter of time, for all these collapses are merely symptoms of the same economic disease: – uncontrolled economic development and speculation, that is now occurring on a global scale. When the American economy collapses, of course, that will mean a general collapse, one too that will be incomparably more serious than that which took place in 1929, as it is not just the rich who have invested in the stock exchange, but a large number of relatively poor people, including many old-age pensioners.

This collapse would be very painful, but it would at least reduce the money available for funding further environmental destruction. Already a number of highly destructive infrastructure projects are being cancelled in the Far East, including the Bakun Dam in Sarawak, and there will undoubtedly be very many more.

On the other hand if this collapse does not occur in the next few years and economic globalization persists, the problems we would face would be even more serious, including world-wide poverty on an unprecedented scale. The global economy is already creating poverty in the industrial world, where, in order to cut costs and increase competitivity, corporations are slashing wages, replacing long-term with short-term contracts, men with women who are paid less, and full-time jobs by part-time jobs. For the same reason we are seeing the systematic dismantling of the welfare state.

As a result, in the UK there is already an increasing number of people who have become too poor to feed their families properly, and this would only get worse. In the Third World, the standard of living of the bulk of the people has been dramatically reduced as have social services of all kinds by successive IMF Structural Adjustment Programmes, and this would only be the beginning, for among other things, with the last GATT agreement we are in effect applying a structural adjustment programme on the world as a whole.

In addition, a new industrial revolution is occurring today before our very eyes, one which can be even more socially destructive than the previous one. It is based on the complete restructuring or ‘re-engineering’ of corporations to enable them to make full use of the new computer-based technologies. It is not confined to the industrial world, but is occurring everywhere. What is more, as the vast transnational corporations that can afford these technologies continue to replace the small companies that previously catered for the domestic economy, fewer and fewer jobs would become available.

Most members of the International Forum on Globalization (a group of scholars and activists involved in these issues, of which I am a director) consider that the highly automated global economy we are creating would be able to function with possibly no more than 20 percent of the world’s potential work force. Let us not forget that in the Third World the vast bulk of small farmers, artisans, street vendors, and small businessmen cannot conceivably survive the changes they face today, any more than their equivalents in the Industrial World have been able to survive those that have occurred there over the last 50 years. Their functions if current trends persist would be systematically taken over by TNCs.

Unfortunately these people make up the bulk of the present population of most Third World countries – possibly 650 out of the 850 million inhabitants of India. In China the number is probably over a billion. Most of these people would clearly be marginalized, and would seek refuge in the mushrooming slums around the major conurbations where unemployment levels are already extremely high. Most in fact would be condemned to utter destitution. This alone would make the global economy we are in such pains to set up, extremely short-lived. No one has ever yet even tried to marginalize 80 percent of humanity, and it is unlikely that it would prove possible.

My brother, James Goldsmith, fully understood this and undertook a personal campaign to try and stop the American Congress from ratifying the GATT treaty. Lori Wallach and Ralph Nader, with whom she works, succeeded in getting together a hundred or so congressmen and their staff members. My brother tried to explain some at least of the implications of the treaty they were about to sign, and I shall quote a passage from his talk:

“If you ratify this treaty no body of people in human history will ever have created so much misery and destitution; and who will be the beneficiaries? I might add the sole beneficiaries? The answer is the super-rich, people like myself, and what good will it do me to have more money when I will be surrounded by hordes of poverty-stricken and half-starved people screaming for my blood? I feel like someone who has been dealt a winning hand at poker when sailing on the Titanic.”

It is quite astonishing that so few people in a position of power and influence have understood this. Of course, they fail to do so at their own cost, for by marginalizing 80 percent of humanity, the global economy, if it is allowed to develop much further, would marginalize itself. It would play an increasingly smaller role in the lives of the bulk of the population of this planet, most of whom, in order to survive, would have to form vast informal networks to produce and distribute the necessities of life, and would constantly come into conflict with the big players in the global economy over access to essential resources like land and water.

Of course, to begin with, the transnational corporations would become increasingly powerful. David Korten has told us that the money involved in mergers between vast TNCs is increasing at something like 50 percent every year. At this rate only a few giant corporations would be left in each sector of the economy.

The corporations, what is more, are becoming more and more vertically integrated. Some of them just about control every step in the production and distribution of the goods they sell – steps that often occur in a large number of different countries. As a result it appears that already 30-40 percent of world-trade is simply made up of what are little more than internal transactions between the different subsidiaries of these giant corporations.

In addition, if the TNCs were allowed further to tighten their grip on world-trade, the figure, I am told, could soon rise to 70 or 80 percent – perhaps even more. We would then be entering a new era of central planning on a global scale – central planning by a few giant corporations that have found more to gain by working together than by needlessly competing with each other. In many ways they would constitute a sort of new world government – one that is likely to be more tyrannical and less concerned with the welfare of its subjects than any previous form of government.

The question is for how long would it be tolerated? Nationalist movements with massive popular support would be likely to rise up throughout the world against this new form of tyranny, as occurred throughout the colonial era, as people were dispossessed of their land and deprived of their livelihoods.

Corporations would soon have to contend with overlapping economic crises, social crises, and ecological crises, not to mention moral and spiritual ones. Many CEOs, I am told, are already terrified of what will happen to their corporations if they continue for long on their present path, navigating as they are in ever less chartered waters. But to extricate themselves is not that easy.

Needless to say, there is no cosmetic solution to the problems that they and the world in general face today. They can only be solved by changing the course on which our society is set. Instead of aiming to create a global economy dominated by vast transnational corporations catering for a world market, we need, on the contrary, to recreate a network of loosely connected local economies run by small and medium sized companies that are rooted in a particular society to which they are accountable economically, socially, ecologically, and morally, and catering largely, though not entirely, for local and regional markets.

Only in this way can we reduce sufficiently the impact of our destructive economic activities on our rapidly degrading environment. Only in this way too can we prevent the further disintegration of our social fabric, for only local economies can provide the economic infrastructure for the healthy and cohesive families and communities that are the key building blocks of a healthy society, and that in the industrial world of today exist in name only.

Only in this way too can we hope to assure the livelihoods of those who still remain outside the orbit of the world economy and provide jobs for those who require them – for only small and medium sized companies can possible provide employment for all those who would otherwise be marginalized and rendered largely destitute. Only a society made up of healthy families and communities based on local economies, what is more, could possibly be imbued with the religio-cultural world-view that can once more give meaning to our lives and rescue us from the sordid nihilism into which we are rapidly sinking.

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