Transnational Corporations
 |
Many companies find that if they export jobs and labor to countries away from where they are incorporated that they can benefit from production costs that are less expensive (usuaully due to lower costs of living in the areas where these jobs are sent). Many such Transnational Corporations (or TNCs) in the US, for instance, offshore jobs to Asia only to "reimport" the products that are created (see diagram above). However, the US is not alone in this practice; companies from many well-established European nations also send jobs offshore and import the goods produced under such labor. |
The prescribed form of international relationships promoted during the post-war period, with the endorsement of free enterprise, has promoted private industry investment around the globe. US corporations with their linkages to international finance, credits, insurance and guarantees have produced an environment ideal for transnational integration.
In doing so these linkages were superimposed on pre-existing structures, and were critical in the re-shaping of their future forms. The importance of the global economy has now overtaken most nation systems. It has become critical to the options available to national economic policy, rather than the reverse.
This change in direction has forced the World Bank to redefine 'development' as 'participation in the world market', rather than the previous achievement in terms of standards of living and gains toward the developed world model .
The costs of production can be dislocated from the consumer retail price through this form of production. Although this maximises profit to the shareholder, fewer consumers will be able to purchase the goods available, because there are fewer individuals in the developed world enjoying the benefits of this global economy. Although wages have risen dramatically for some, there are many more individuals and families who have witnessed substantial declines in wages, with increased demands for productivity. Many more are now unemployed or under-employed, due to industrial and service restructuring.
TNC's are able to maximise production efficiency through economies of scale, removal of 'middleman' resale costs, flexibility in resource and production along with increased specialisation. These resource rich corporations absorb entire industries, and related services, such as marketing, media, and human resources. Whole companies are bought and sold at the discretion of the Board of Directors.
This loss of personal involvement in the industries within the corporation, and the lack of understanding of local impacts of decisions have accelerated a loss of civic responsibility in international business enterprises. Although these businesses market themselves as consumer-oriented, they have no commitment to the community or its value systems. There are marked examples of consumer exploitation by some of the largest TNC's. These included Nestles marketing of baby formula by giving supplies to new Indian mothers without adequate explanation. As the new mother substituted the formula, which lacked antibodies and also required sterilising equipment to prepare safely, their own ability to produce ideal breast milk declined, meaning that they were then reliant on expensive formula, a catastrophe among the world's poorest families.
Many of these third world consumers are illiterate. Knowledge of English is extremely limited too. In these environments the details in the print are less important than the images that accompany them. Condensed milk has also been sold to mothers for infant consumption, against all modern medical warnings, by putting pictures of babies on the container. The principle that 'let the buyer beware' is difficult to justify, when language and education are operating against the consumer. The moral imperative to operate within ethical bounds lies with the informed TNC, and their Board.
