Corporate Behavior

1
Corporate Behavior Structural Adjustment

• Marian Smith
• Emily Buckwalter
• Julia Lin
• Marcela Fuentes
• Mike Gallagher

2
The Rules of Corporate Behavior By Jerry Mander

• Authors Overall Argument
• P1 If the structure and primary ability of an
  entity is to increase profit, then it is not
  concerned with people and the environment
• P2 Corporations are entities with the structure
  and primary ability to increase profit
• C Corporations are not concerned with people
  and the environment

3
Argument 1 - Preface

• 100 out of 450,000 corporations in the US pay for
  75 of commercials
• Public television has lost federal support
• Corporations now fund 50 of commercial-free
  public television

4
Corporate Consciousness The Effect of Modern
Media

• P1 Media has great influence over US consumers
  values, priorities, and lifestyles
• P2 Corporations heavily control media
• C Corporations have great influence over US
  consumers values, priorities, and lifestyles

5
Dissecting Premise 1

• P1 If something influences us to be satisfied
  when purchasing commodities, then it affects our
  personal values, priorities, and lifestyles
• P2 Media and the use of commercials influences
  us to be satisfied when purchasing commodities
• C - Media affects our values, priorities, and
  lifestyles

6
Argument 2 - Preface

• Corporations provide books, videos, and computer
  programs for free as a public service
• Example Oil Chemical companies providing
  educational material
• Demonstrates nature as valuable resource
• Educates youth how to manage nature through
  pesticides, chemicals and large scale agribusiness

7
Corporate Consciousness Educational Factor

• P1 Primary Education greatly influences our
  children's values, priorities, and conceptions of
  how life should be lived
• P2 By donating educational material,
  corporations control the structure of Primary
  Education
• C Corporations greatly influence our children's
  values, priorities, and conceptions of how life
  should be lived

8
Dissecting Premise 1

• How does Primary Education greatly influence our
  children's values, priorities, and conceptions of
  how life should be lived?
• First structured educational system
• What is learned as youth greatly affects a person
• Does it teach values? Or does the family teach
  values? Religion?

9
Corporate Shame Obligations to Community Welfare

• P1 Management must act primarily in economic
  interests of shareholders, which is to make a
  profit
• P2 Ignoring community welfare issues avoids
  seriously damaging lawsuit costs, and therefore
  leads to higher profits
• C To achieve higher profits, it is necessary
  for management to ignore community welfare issues

10
Dissecting Premise 2

• Does ignoring community welfare increases
  profits?
• By acting in the interest of community welfare,
  management would be ignoring profitable ventures
• If profitable ventures are ignored, shareholders
  would file costly lawsuits that management was
  not acting primarily in their economic interests
• Must management completely ignore community
  welfare?
• What if acting in the interest of the community
  if it is also a profitable venture?

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Argument Preface

• Human Rights
• Law calls corporations fictitious humans
• Gives right to buy/sell property or sue in court
  for injuries or slander
• Corporate Speech (i.e. advertising, PR, etc.)
  protected under the First Amendment

• Human Responsibilities
• In cases of negligence (causing death or injury)
  corporation cannot be jailed or executed
• May be fined, but structure does not change
• Corporations do not die a natural death
• No feelings of shame or remorse

12
Corporate Schizophrenia Corporate Life

• P1 If something has the same rights as humans,
  but does not have to abide by human
  responsibilities, they are above the law
• P2 Corporations have the same rights as humans,
  but do not have to abide by human
  responsibilities
• C Corporations are above the law

13
The Inherent Rules of Corporate Behavior

• P1 If a persons morality is constrained by
  growth profit, they are constrained from
  exercising personal morality where this conflicts
  with profit
• P2 Corporate morality is constrained by growth
  profit
• C People in a corporation are constrained from
  exercising personal morality where this conflicts
  with profit

14
The Inherent Rules of Corporate Behavior The
Growth Imperative

• P1 Desire for harvest of scarce resources
  forces US culture and standards of living on
  resource-rich regions
• P2 Corporations desire harvest scarce
  resources
• C Corporations force US culture and standards
  of living on resource-rich regions

15
The Inherent Rules of Corporate Behavior
Opposition to Nature

• P1 All corporate manufacturing activity depends
  upon intervention in reorganization of nature
• P2 All intervention reorganization of nature
  is destructive to nature
• C All corporate manufacturing is destructive to
  nature

16
The Inherent Rules of Corporate Behavior
Homogenization

• P1 By creating more commodities for profit,
  there is a homogenizing pressure on society
• P2 Corporations create more commodities for
  profit
• C Corporations exert a homogenizing pressure on
  society

17
Dissecting Premise 1

• Why does creating more commodities put
  homogenizing pressure on society?
• Homogenized Society everyone is the same owns
  the same material goods ex. Nuclear family
• Choice encourages accumulation of commodities
• Celebrates material values
• Corporations do not like sharing communities or
  nonmaterial lifestyles
• Represent threat to homogenization of worldwide
  markets and culture

18
Remaining Arguments

• Competition Aggression
• Amorality
• Hierarchy
• Quantification, Linearity, Segmentation
• Dehumanization
• Exploitation
• Ephemerality Mobility

19
The Rules of Corporate BehaviorReview

• Corporations are setting up an ideal world for
  their expansion
• Managers must set personal morals aside for the
  good of the company
• Corporations have the rights of humans, but not
  the responsibilities
• Basic rule of corporate operations is profit
  growth first
• Corporations are willing to exploit weaker
  countries for their own profit

20
Structural Adjustment Programs Success for
Whom? By Walden Bello

• Structural adjustment programs may not be the
  optimal solution to debt of developing countries
• Negative effects on the economy resulting from
  structural adjustment programs

21
What are structural adjustment programs (SAPs)?

• What are structural adjustment loans (SALs)?
• Loans provided to debtor countries
• Immediate objective To rescue northern banks
  that had become overextended in the Third World.
• Long-term objective To further integrate
  southern countries into the global economy.

22
How are these objectives accomplished?

• The World Bank and the International Monetary
  Fund (IMF) make loans to Third World countries
  with massive debt.
• Interest payments are then transferred to private
  Northern banks.
• But, to receive these SALs, the governments of
  the borrowing country must comply with specific
  economic policies

23
Conditions of the SALs

• Remove restrictions on foreign investments
• Reorient the economy to favor exports
• Reduce wages or wage increases, reducing
  government spending.
• Cutting restrictions on imports (tariffs, quotas,
  etc.)
• Devaluing the local currency against other hard
  currencies
• Privatizing state enterprises
• Undertake a deregulation program to free the
  export industries from government controls

24
What is the Third World Debt Crisis?

• Began in the 70s when wealthy oil-exporting
  countries put their money in Western banks
• Banks loaned the money to developing countries
• Factors such as increasing interest rates, global
  recession, and low commodity prices caused debts
  to increase rapidly
• Debtors quickly fell behind in payments

25
1982 Third World Debt Crisis

• P1- During the Third World Debt Crisis, many
  debtor countries needed SALs to pay off their
  debts
• P2- Receiving SALs required a country to undergo
  an SAP
• C- Many debtor countries underwent SAPs during
  the Third World Crisis

26
Study by Eva Jespersen

• Sampled 24 countries
• Evaluated by
• rate of capital accumulation
• Capital accumulation Increases in a country's
  capital stock when gross investment is greater
  than depreciation
• share of manufacturing in GDP
• growth of exports
• Exports commodities sold to a foreign country

27
Results

• Capital accumulation slowed in 20 countries
• Share of manufacturing in GDP stagnated in 18
  countries
• Exports fell in 13 countries
• Increases experienced in 11 countries did not
  compensate for the increase in imports

28
Explaining Stagnation

• Misdiagnosis of the problem
• World Bank and IMF believed the barrier to growth
  was insufficient integration in the global
  economy
• The barrier to growth in the pre-SAL period was
  due to
• Price increases in OPEC oil (1970s)
• Debt crisis in the early 1980s

29
Explaining Stagnation

• Consequences of the measures taken by the World
  Bank and the IMF
• Reduction in government spending and wage cuts
  led to an economic contraction and increased
  unemployment.
• Reduction of price controls on imports increased
  the local cost of raw materials and components
  used in local assembly plants.
• Rising exports of small range crops (sugar, palm
  oil, and bananas) led to a decline in prices and
  therefore a decline in earnings.
• Much of the earnings are in any case used for
  servicing debt rather than for productive
  domestic investment. (Bello 288)

30
Chile An Economic Laboratory

• 600 state enterprises sold off
• Went from being one of most protected to one of
  least protected Latin American economies
• Foreign investors achieved a strong presence in
  the economy
• Deregulation of domestic financial market had
  been accomplished
• Economy had become more integrated into the
  international economy

31
If success is measured by

• The effects on Chiles external accountsthen SAP
  was a failure as Chiles external debt rose to
  19 billion in 1991
• Sustained growththen SAP was a failure as
  Chiles GDP growth averaged
• 2.6 percent per year (1974-1989) and
• 4.0 percent per year (1950-1961) as opposed to
• 4.6 percent per year (1961-1971) before SAP was
  applied
• Free market policieswhich plunged Chiles into
  two major depressions in one decade

32
Reasons for failure of the Chilean economy

• Manufacturing sector lost ground (26 to 20 of
  GDP in 1960s)
• Export-oriented enterprises grew which led to
  environmental problems
• Chilean economys dependence on exports and a
  shrinking manufacturing base
• Social impact of the radical free market policy

33
Chile is not alone

• Average income in the North was about 18 times as
  much as the average in the South.
• Latin America, SAPs largely canceling out the
  progress of the 1960s and 1970s (Iglesias 1992).
  
• Hunger and malnutrition gave rise to tuberculosis
  and cholera
• 1991 1300 in Peru died from cholera
• Sub-Saharan Africa Total debt in 1994 was 110
  of GNP, compared to 35 for most developing
  countries

34
Outward objectives

• Structural adjustment has been a huge failure if
  the measure of success has to do with resolving
  the debt problems in the Third World economies
  and bringing about sustained economic growth

35
Underlying criteria

• Structural adjustment has been a huge success if
  the measure of success is that debtor nations
  have become able to pay the interest payments on
  their debt. and, most important of all, they
  have become more tightly integrated into the
  capitalist world market and thereby made
  increasingly dependent for their sustenance on
  the northern powers and the transnational
  corporations that effectively control them.
  (Bello 293)

36
Objectives of the SAPs

• P1- The objective of the SAP was to bring about
  sustained economic growth
• P2- Statistics have shown that countries with the
  SAP have not experiencedeconomic growth
• C- Therefore, the SAP did not accomplish its
  objective

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• Questions?

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Resources

• http//www2.gol.com/users/bobkeim/money/debt.html
• www.j-bradford-delong.net/macro_online/display_glo
  ssary.html 
• http//www.hyperdictionary.com/dictionary/Export