Rand report authors believe that "Nation-building is not principally about economic reconstruction; rather, it is about political transformation." This seems deliberately obfuscatory or naïve.
Imposing U.S.-style political transformation on people will create more markets for goods, but more significantly it will create more potential workers, whose other means of subsistence based on access to commons rights in water and land have been extinguished by the nation-building.
Political transformation imposed with military might by sources external to a culture require remaking that society in its most personal and its public attributes. And as Robert Heilbroner put it, there is "the radically challenging knowledge that economic success does not guarantee social harmony."
In addition to nation-building, the state has a role in the marketocracy of authorizing the trade treaties and laws by which corporations overrule federal, state, and local constitutional, criminal, economic, environmental, health and safety, and labor laws. Elected and appointed officials negotiate and vote for passage of these treaties and laws that trump the public will and harm the public wellbeing.
For example, GATS, the General Agreement on Trade in Services, a 1995 WTO trade agreement currently under revision, establishes privileges for transnational companies operating within a country. It covers "services," meaning banking, construction, garbage collection, public education, mining, telecommunications, the supply of drinking water, social services, libraries, postal services, unemployment and employment development services, anything that can be construed as a service.
The intent of the GATS is to limit government involvement, "whether in the form of a law, regulation, rule, procedure, decision, administrative action or any other form," to quote the treaty itself. Public Citizen's Lori Wallach has called GATS a "massive attack on the most basic functions of local and state government."
Under GATS revisions, any activity the federal government agrees to declare a "service" would become open to privatization. The European Union is currently pressuring the United States to make water among the first of the services it places under GATS. If clean drinking water is declared a service under GATS, no government body in the U.S. could insist that the supply and/or treatment of drinking water be publicly owned or managed. If any government wanted to create a publicly owned water district, foreign corporate competitors would have the right to underbid the government for control of the service. They would be able to underbid by eliminating health, safety, labor, and environmental regulations that would interfere with the ability to profit from the business; and they would be allowed to challenge any extant or future health, safety, environmental or labor regulations related to a service under GATS.
On March 28, 2003, twenty-nine California legislators signed a letter of concern to U.S. Trade Representative Robert Zoellick about the provisions contained in GATS. The letter states that GATS could usurp any government regulation, including nurse-to-patient staffing levels, laws against racial discrimination, worker health and safety laws, regulatory limits to oil drilling, and standards for everything from waste incineration to trace toxins in drinking water. As a result, the letter states, GATS would "jeopardize the public welfare and pose grave consequences for democratic governance throughout the world."
WTO trade tribunals are unelected bodies that have no accountability to the public. If the GATS treaty is approved by the U.S. Senate, conflicts between federal, state, and local law and private, for-profit corporations will be heard in WTO trade tribunals, not in U.S. courts.
Finally, the state has an important role as provider of military power, funds, and covert intervention to protect corporate resources. British, French, and U.S. forces have acted to protect and to recover nationalized corporate holdings on numerous occasions between 1950 and 2003. However, with increasing frequency in the past decade, transnational corporations have hired private armies to conscript labor, terrorize and murder citizens, commit genocide , enclose and destroy public lands, and otherwise violate sovereignty and human rights, thereby reducing reliance on nations' armed forces.
Crimes, violations of sovereignty, and overthrow of laws:
Russell and Gilbert (1999) define corporate crime as avoidable harm. With the American Law Institute Model Penal Code as a base, they show theoretical and concrete applicability to corporations. (While the ALI Model Penal Code is not in law anywhere, many states use it. In addition, ALI has a much-cited Principles of Corporate Governance section to its MPC. ) The model identifies offenses involving danger to the person, offenses against property, offenses against family, offenses against public administration, and offenses against public order and decency.
At present, the fora available for prosecution of corporate crime are effectively limited to U.S. federal and state courts, with almost no applicability to non-U.S. corporations, though Khanna (1996) points out that in the course of the past 20 years the number of acts for which criminal sanctions are available has increased significantly in the U.S.
Crimes committed by transnational corporations can be classified into a few categories - Economic Crimes, Environmental Crimes, Health and Safety, Human Rights, and Labor Crimes, and a final category, Overthrow of Democratically Elected Governments. In this last category a number of extant trade treaties can and should be placed.
Economic Crimes First:
In 1994, an international court, the Dispute Settlement Body, was established within the World Trade Organization to decide cases brought against states for breach of the principles of free trade and competition. But there is remarkable disparity for economic crimes committed against individuals, holders of pension plans, citizens of other nations, small farmers financially ruined by tariffs and agricultural subsidies imposed by powerful states.
In Bolivia, citizens of the Cochabamba community threw San Francisco-based Bechtel Corporation out - ultimately out of the country - for privatizing public water and price-gouging. Now Bolivia is being sued under WTO laws for the lost profit.
Albala (2003) points out that corporations are generally immune from prosecution for economic crime because there are no international legal definitions of economic or environmental crimes. The Permanent International Court of Justice deals only with states, and the International Criminal Court (under the Rome statute) deals with individuals. Because neither body addresses crimes of corporations, the only remedy for economic crime is action against the state.
Most intractable are economic crimes perpetrated by corporations through their agents, sovereign states. De Staal (2003) reports that in Brazil, federal police discovered $30 billion diverted via Banestado, the state bank of Parana, to New York between 1996 and 1999. In Bahia, Antonio Carlos Magalhaes - governor, senator, former minister, head of TV Globo-Bahia, and leader of the right wing Liberal Front party - may be brought down by a police corruption scandal.
"The power of these local authorities cannot be trimmed simply by passing laws," De Staal writes. "To establish democratic control over public institutions and funds, to give meaning to res publica, . . . civil society must be backed by a security force ensuring respect for the government's democratic authority and for the rights of the people."
More in Part Three, later this week
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