The tumultuous epoch of megacorporate globalization is upon us; it is in need of systematic analysis for adjustment and reform. The many negative attributes and results emanating from the process have spawned a large and growing anti-corporate, globalization literature. David Korten's major contribution, When Corporations Rule the World (WCRTW, 2001) is considered to constitute "[t]he foremost anti-corporate globalization book at the moment" (Marien 2001, 12). This assessment is reinforced by six pages of statements strongly endorsing Korten's WCTRW by such luminaries as Desmond M. Tutu, Ralph Nader, The Financial Times (London), Steingrimur Hermannsson, Richard J. Barnett, Paul Hawken, and Herman E. Daly among others. In addition to WCRTW, Korten's other contributions offer similarities and interrelate to the issues and points of view traditionally raised by institutional economists. This paper focuses on how a clarification and synthesis of this interrelation might be advantageous to both David Korten, in particular, and institutional economists in general.
David Korten: Background and Contribution
Korten has a Ph.D. in business administration from Stanford and has taught at Harvard. In addition to his published works, which serve as required reading in university courses throughout the world, Korten is president of the People-Centered Development Forum and co-founder and board chair of Positive Futures Network, which is the publisher of YES! A Journal of Positive Futures. In over thirty years of field experience, Korten has served as a staff member of the Ford Foundation in Manila and Asian regional advisor on development management to the U.S. Agency for International Development.
As a broad overview, one might assess Korten's analysis of globalization as having evolved in a sequential pattern of three interrelated and integrated stages. The first, marked by Getting to the 21st Century (1990), delineated a growth-centered vision as being fundamental to an explanation of the emerging global crisis. The second stage appeared with the publication of his major work, WCRTW (1995; revised in 2001). These two editions relate to "the structure and dynamics of capitalism" controlled and dominated by megacorporate power and policy (2001, 8). The third stage, covered in The Post-Corporate World: Life after Capitalism (1999), essentially addresses the issue of alternative future directions in the context of Adam Smith's market theory for the future after the demise of "cancerous capitalism."
In the first stage, Korten assessed the unfolding tragedy of the global situation emerging from the 1980s as one of profound crisis. Many years of practical field experience, which nurtured bureaucratic frustrations, led Korten to conclude that despite "good intentions international assistance agencies deal in money, not in the social processes that are the key to institutional change" (1990, xii; Korten and Alfonso 1983). This period of Korten's evolving intellectual journey is covered in articles in addition to a few of his earlier books. Development policies based upon a people-centered vision are preferred over policies directed by money and conventional concerns for economic growth (Korten and Klaus 1984). Community Management should be oriented toward having resources controlled by the people (Korten 1986).
This general background provided for the genesis of Getting to the 21st Century (Korten 1990). "Three interrelated global crises were burned into the human consciousness during the 1980s: poverty, environmental failure and social violence" (1990, 11; 2001, 31). These anomalies, indicative of institutional maladjustment, were and still are not being properly addressed. In the Korten perspective, the roots of our crises reside in a growth-centered vision which dominate and obfuscate a developmental process requiring transformation. It is a misconception to view growth as being synonymous with development. The current policies and manifestations of a growth-centered vision will not ameliorate the current global crisis but rather will lead to exacerbation. There is a need for a people-centered vision realized through a development transformation of our institutions, values, technology, and behavior "consistent with our ecological and social realities" (1990, 3-4). The areas of transformation to be addressed are lodged in justice, sustainability, and inclusiveness to provide everyone an equal opportunity in the achievement of basic human rights. Part 4 offers an agenda to provide for new patterns of growth. The bottom line is that the conventional growth-centered vision of the past has been divorced from a development process of transformation required for the amelioration of the current crisis endemic to our global economy.
The impetus for the second stage appears to have taken place in a meeting at Baguio in the Philippines in 1992 (Korten 1995, 6-7; 2001, xvii, 16). This established the core positions presented in WCRTW (1995). Though the new and revised edition published in 2001 added a few new chapters and omitted others, it still represents a continuity of Korten's previous overall analysis. In the first five years of its publication, 90,000 copies were printed and translated into thirteen languages. Korten's reputation as a scholar and political activist became globally recognized. The basic message, promulgated and well-timed with an emerging global movement, is the belief that "corporate globalization is enriching the few at the expense of the many, replacing democracy with rule by corporations and financial elites, destroying the real wealth of the planet and society to make money for the already wealthy, and eroding relationships of trust and caring that are the essential foundation of civilized society" (2001, 5).
Basic human needs are not being fulfilled. "Confidence in our major institutions and their leaders has fallen so low as to put their legitimacy at risk.... [T]hese institutions are working for only a fortunate few" (2001, 32). The attention on the growth-centered problem and illusion of the 1990 publication is still maintained in WCRTW with "Cowboys in a Spaceship" and the "Growth Illusion" (2001, 25-56). But the onus of culpability shifted to megacorporate power as the agent of causality. Corporations had "emerged as the dominant governance institutions on the planet, with the largest among them reaching into virtually every country of the world and exceeding most governments in size and power" and "General Motors' sales revenues (133 billion) roughly equaled the combined GNP of Tanzania, Ethiopia, Nepal, Bangladesh, Zaire, Uganda, Nigeria, Kenya, and Pakistan. Five hundred and fifty million people ... a tenth of the world's population" (2001, 60, 210; 1999, 42).
The increased power inherent in the evolving corporate size became increasingly directed toward the making of money and profits, rather than an explicit servicing or provisioning for basic human needs and well-being. This fundamental Veblenian dictum permeates the whole of Korten's analysis of the globalization process. Though reality supports the fact that globally corporate power promotes "managed competition" in a planning system rivaling that of the former Soviet Union, corporations offer the fanciful facade of a global economy controlled by free markets (2001, 205-20). Corporate libertarians support a free-market, neoliberal ideology which "has been embraced around the world with a near-religious fervor. Money is its sole measure of value" (75-92). Neoliberalism, embedded in corporate libertarianism, services in the rationalization and sanctification of greed and has nurtured a new colonialism manifest in the Bretton Woods institutions (121-74).
The role and function of the IMF and the World Bank in relation to the LDCs has been negative. But megacorporate globalization also entails a negative feedback loop in the domestic economies of mature nation-states as well. Provisions contained in the WTO and NAFTA allow for treaties to supersede and override national sovereignty and legislation. Laws passed in the United States under the agency of the Constitution and originated through the democratic process, dealing with such primary areas including the environment as well as labor and overall human rights, can be abrogated by provisions contained in the WTO and NAFTA.
Consequently, the United States, as a democratic polity constituted by "we the people," is trading off democracy in trade policies and treaties produced as a manifestation of the power of an elite minority of corporate libertarians. The result has been a movement from democratic pluralism to Corporate Hegemony (Korten 2001, 96-103; Dugger 1989). As a result we now have downsizing, a "race to the bottom," unbelievable CEO rapacity and profiteering, and greater inequality of wealth and income distribution, both nationally and globally, in addition to environmental and social disintegration. Profits are supposedly achieved through the reduction of the costs of production. We now find out, in converse, that the real human costs of corporate profits, both socially and economically, are becoming increasingly high.
Many other interesting insights can be derived from Korten's analysis of corporate globalization. For example, his coverage of how corporate power is used to service elite consensus and the buying out of democracy are very much worth the reading. Consensus is achieved through the Council of Foreign Affairs, the Bilderberg, and the Trilateral Commission (Korten 2001, 135-42). To be noted is that all three "accept without question the ideological premises of corporate libertarianism" (141). This ideological foundation, buttressed by corporate power, has borne fruit in the buying out of democracy and manifest in the current debacle of greed associated with Enron, WorldCom, Tyco, and so on (143-50). But how then to reclaim our democratic power (23-87)? How then to...