Flat White

Are multinationals now more powerful than the nation state?

18 September 2018

7:55 AM

18 September 2018

7:55 AM

If you look outside your window, the world is telling us that neoliberal globalisation has transferred too much power from states to multiple transnational corporations. This shift can be witnessed in corporations such as Facebook and Google through elements including capital, tax evasion, lobbying and political censorship. This has caused a decline in the state’s power and thus a resurgence of right-wing protectionist politics throughout the world.

As globalisation intensifies, power and capital become increasingly closely related. This modern relationship has slowly but surely transferred power from sovereign states to multinational corporations, as many corporations begin to have more capital than some states. For instance, as of 2018, Facebook obtained a higher income than Serbia’s GDP of US$40 billion and Google earned US$110 billion giving it more capital than half of all countries in the world. In 2013, transnational corporate supply chains were accountable for 80 per cent of world trade.

This increased participation in the global economy has guaranteed the multinational dispersal of capital. As a result, this has had direct negative effects on states’ national economies and power due to the capital redistribution. This is found through the identification of increased difficulties in states performing their civil duties. These increasingly difficult duties include providing public goods and property rights, as the world engages in open trade, wild information-technology advances, and substantial financial deregulation.

As the connection between neoliberal globalisation and state actors becomes progressively ‘borderless’ so does political dissatisfaction with financial policies. This has resulted in the rise of anti-globalist protectionist politics such as Brexit, Italy’s Five Star Movement and Donald Trump.

As national borders have opened and trade barriers have collapsed, transnational crime has grown at unparalleled levels. A prime example of this and the importance for states to reacquire power can be found in the groundbreaking release of the Panama Papers. The 11 million files confirmed hundreds of multinational companies to be involved in criminal activity with the use of fraud, tax evasion, and evading international sanctions. This tax evasion removes more capital away from its rightful owner the sovereign state. Multinational juggernauts Google and Apple were found to have paid just $74,176 in taxes whilst it profited over $1 billion in 2013. On the other hand, Apple paid just $40 million after a $6 billion profit.

Multinational companies are also obtaining more power through their use of lobbying. In 2017 Google spent more than US$18 million lobbying politicians, lawmakers and the White House, becoming the number one lobbyer in the world, while Facebook paid US$11.5 million. Both companies have aggressively increased their spending since the 2016 election of Donald Trump. The two left-wing multinational corporations focused on influencing policies relevant to free trade, immigration and most importantly America’s First Amendment right to free speech and free press. This has led to the multinational platform media political censorship

of right-wing commentators. This is being documented as the ‘purge,’ where multinational media platforms Google, YouTube, Facebook and Twitter have all taken measures to ban, disable and censor liberal free thinkers, including Jordan Peterson, Infowars’ Alex Jones and Milo Yiannopoulos. This caused President Trump to announce that he will address left-wing censorship of conservative news and online content, calling it “a very serious situation.” Trump has stood up to transnational corporate power and requested that Congress pass legislation prohibiting social media platforms from banning users for First Amendment-protected speech.

The final reason multinational companies are censoring right-wing commentators is because of Trump’s and Europe’s use of protectionism and tariffs as its goal is to bring back power to the state. Trump, in particular, has promised a buy and hire American direction. Multinational companies have always been used to having the power to decide their own path and decisions based on predictable circumstances such as supply chain, taxes and labour costs. Multinational companies now have to deal with trade issues and new policies which they are not prepared for. This resurgence of right-wing protectionism aims to bring back power to the state and is seen as a direct threat to multinationals.

It has become clear that neo-liberal globalisation has intertwined capital and power together. This is known through massive amounts of money being able to influence policy through lobbying.

As multinational corporations earn more capital than nations and avoid paying tax to states the power has shifted from states to corporations. Although citizens have begun to take notice with a rise in protectionist ideology scattering across the world. The multinationals have begun to silence the critics of the neoliberal globalist agenda through the banning of right-wing commentators.

Globalisation has handed multinationals too much power and the need for strong states is warranted.

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