Transnational corporations
Transnational corporations (TNCs) are an increasingly powerful part of our global society. These companies are able to merge and acquire each other, forming larger and larger entities which end up dominating the international marketplace. While the aim of TNCs is to make a profit for their investors, they have also come to play a huge part in all of our lives. They determine much of modern life - the products we buy, the foods that are sold, the entertainment on offer and so on. Although it may seem that we have increased choice about what we want to spend our money on, in fact this choice is being decided for us by what a small number of gigantic companies decide to sell.
No-one elects the owners and directors of these companies, but they often play a more powerful part in our lives than governments. Increasingly governments are not even able to control the actions of TNCs, because this is seen to contravene the ideas of 'free trade'. A typical TNC operates in many countries. Its head office, where major decisions are taken, will be in one country, but its manufacturing operations may take place in many other countries. Typically, a TNC will find countries with the cheapest labour, and the most relaxed environmental and labour laws, to keep down its costs. If a government tries to impose stricter laws, the TNC can threaten to relocate to another country. This intimidates poorer countries into accepting lower standards, because they do not want to risk losing the jobs and investment the company brings.
Governments and corporations sometimes seem to have a very close relationship. For example corporations may fund presidential election campaigns, and then wait to be rewarded in return by beneficial government policies. Rich country governments may force poor countries to accept particular trade deals, or give contracts to particular companies, by threatening to remove or reduce their aid if they do not comply. In this way, corporations manage to influence or even dictate government policy.
Many poor countries have been forced to privatise their services as part of structural adjustment conditions. This means private companies (often TNCs) move in to run services at a profit, such as water systems, railways, and telephone companies. The IMF believes government intervention should be reduced to a minimum. The problem is that unlike governments, private companies have no obligation to look after the poorest people. Therefore if people cannot afford to pay for essential services, they just miss out.