Corporate Accountability SP11

Economics -> American Capitalism and Social Justice Spring 11

Corporate Accountability

When the choice is between people or profit, the answer should be an easy one. However, for multinational corporations whose ultimate goal is to maximize profit, it is not always so simple. Today, our society is under increasing threat from corporate abuses. This threat has prompted many scholars as well as organizations and campaigns to challenge the issue of Corporate Accountability.

Scholars

Alperovitz

In America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, And Our Democracy, Gar Alperovitz discusses inequality, insecurity and the lack of opportunity that is evident in The United States current political and economic system. He states that the three historic values of America; liberty, equality and a meaningful democracy are diminishing through the current system of capitalism. Continuing with that the current system is not doing what was initially promised and there is a need for change. Large private corporations have gained such a large amount of power that it is affecting the democratic ideals that should be instilled in society and demoralizing workers. Alperovitz provides various ideas on an alternate system to capitalism and what it would look like. He suggests a system called the “Pluralist Commonwealth” which would have corporations become better members of the community through democratic control over them. There would be the redistribution of income and assets, providing the community and employees with greater revenue through the assets and also promoting decentralization. Alperovitz states that this can only be achieved through transforming and making the public the owner of large scale wealth and by developing a new culture. He states four key elements in relation to this, that

1. New institutions must be developed that hold wealth on behalf of small and large publics 2. Democracy cannot be rebuilt with a big D in the system without the implementation of small d in everyday life; including the economic institutions that sustain stability of local community life 3. There is no way to achieve democracy in a continental scale system without radical decentralization 4. There is no way of achieving meaningful individual liberty without individual economic security and more free time. Which cannot be achieved without a change in ownership of wealth and the income flows it permits.

He continues with that in order to do this the four key elements must be built on. He builds on the four key elements stating that “Without local democracy, there can be no culture of democratic practice; without security and time, there can be only a weak citizenry; without decentralization, it is difficult to mobilize democratic practice and accountability; and without major and far reaching new forms of wealth holding, there can never be adequate support for the conditions and policies needed to build a more egalitarian and free democratic culture. Finally, the model is based on the judgment that greater equality, greater individual economic security, greater amounts of free time, and-upon this basis-the reconstitution of a culture of common responsibility are ultimately required if we are ever to reorient our community and national priorities in general.” Pg 234 More specifically in the chapter where Alperovitz focuses on inequality and giant corporations, he discusses the power that the rich and large corporations are able to obtain. In relation to politics he states that only the wealthy can currently participate in the version of democracy that has developed. Alperovitz in America Beyond Capitalism lists ways large corporations gain control and exploit in the current capitalist system. “Large corporations regularly

1. Influence legislation and agenda setting through lobbying 2. Influence regulatory behavior through direct and indirect pressure 3. Influence elections via large-scale campaign contributions 4. Influence public attitudes through massive media campaigns 5. Influence local government choices through all of the above- and add implicit or explicit threats of withdrawing plants, equipment, and jobs from specific locations 6. Influence choice at all levels by virtue of the simple fact that in the absence of an alternative, the economy as a whole depends on the viability and success of its most important economic actor- a reality that commonly forces citizen and politician alike to respond to corporate demands.

A response to these activities that some would seek would be government regulation of these actions large corporations participate in. However Alperovitz states that corporations have been able to develop powerful lobbying and other tactics that influence federal agencies and commissions that are developed to oversee their functioning. A powerful force that has been able to countervail the political powers of corporations has been organized labor. Unfortunately however due to the decline in labor union membership there has been a decline in labor unions abilities to restrain corporate influence. Corporate political contributions outnumber labor unions 14 to 1. Further in this chapter of America Beyond Capitalism there are proposed partial solutions for corporate accountability including public disclosure of information, corporations that would receive preferential tax treatment if agreed to a code of conduct. A Social Responsibility Amendment that would require corporations to renew a charter every twenty years and if the corporation could not prove that they serve the common good there assets would be redistributed to another community that could better meet social goals. There is also the suggestion that employee and community members be appointed seats on corporate boards to directly represent the interest of the workers and community. An internal corporate democratization tactic is also provided that would be a system involving a self-governing employee-owned enterprise. The last strategy suggested is a greater institutional change that would have large blocks of stock held by public and private pension funds. These are the strategies that Alperovitz suggests to constrain the power of large corporations as well as his “Pluralist Commonwealth” system.

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Yates

Why Unions Matter

In his book Why Unions Matter, Michael Yates uses simple terms to answer basic questions about the function and formation of unions, the process of collective bargaining, and the relationship between unions and American politics. He begins by explaining that unions provide solidarity and allow worker’s demands to be met as a group when they would have likely been ignored otherwise. This solidarity provides not only a wage advantage but also enhanced grievance procedures, benefits, and dignity for the American worker. <ref name="Yates"> Yates, Michael D. (2009). Why Unions Matter. New York, NY: Monthly Review Press. </ref>

Yates also addresses the allegation of the corrupt nature of unions by saying that although there have been cases of illegal activities, generally unions leaders are elected by their members and accountable to them. He argues that this model of democracy marks the vast contrast to the lack of democracy of corporations. <ref name="Yates" />

In the last chapter, Yates identifies that the core of the labor agenda are the right to employment, the democratic control of production, more leisure time, reduced income gap, and an end to discrimination in the workplace. <ref name="Yates" /> He also suggests that even though some of these elements are included in the Democratic agenda, the labor movement might need more sympathetic allies from the Labor Party, which is currently weak and has no chance of winning an election. <ref name="Yates" /> Yates’ idea of labor movement reform calls for significant support from a stronger political party to fight for the rights of American workers.

Challenging Walmart

Major Challengers

Walmart Watch

Walmart Watch

Walmart Watch (WW) was formed in the spring of 2005 as a joint project of Five Stones and the Center for Community and Corporate Ethics to criticize Walmart’s corporate accountability as the largest corporation in the United States. [1]

Since its establishment, WW has represented hundreds of thousands of Walmart employees countrywide. Through in-depth research and analysis, WW has been educating policy makers, community leaders, media, and the public about Walmart’s wages, benefits and impact on communities.

In November 2005, WW kicked off a series of events called “Higher Expectations Week”. Supported by over 300 organizations, this nationwide campaign included more than 1000 local events and 7000 house parties to advocate for stronger efforts by federal, state, and local officials to hold Walmart to their standard of “high expectations.” .<ref name="walmartwatch">Higher Expectations Week, additional text.</ref>

WW has also performed a “Price Check” program to test Walmart’s low-price guarantee policy. There has been a lot of speculation about Walmart’s pricing strategy and how they usually cut prices upon moving into a new community only to raise them when free of nearby competition. For this nationwide project, WW chose 5 everyday household products for testers to purchase and compare prices across the country. [2]

By shining a spotlight on some of Walmart’s shortcomings, WW hopes to challenge the giant corporation to become a more responsible corporate citizen and a positive force for change for millions of American workers.

Wake Up Walmart

Wake Up Walmart

Wake Up Walmart (WUW) is a community-based campaign launched by the United Food and Commercial Workers Union in 2005 to be the center of a new grassroots movement that will lead and revolutionize the national fight to change Walmart [3]

Paul Blank, campaign director for the WUW campaign, stated: "Walmart's greed puts profits before people… we are forming a grassroots movement to empower millions of Americans to ask Walmart to put people first… There is only one force powerful enough to change the largest corporation in the world, the largest retailer in the world and the largest employer in the world-the American people. We are Walmart's consumers and it is time for Walmart to wake up and start doing what is right for its employees, our families, and our country." [4]

The WUW campaign aim to give retail workers necessary tools to band together in common purpose in order to change their employers’ business practices. The campaign utilizes an array of organizing strategies, innovative media, a blog and other internet tools that have been used successfully in previous political and grassroots campaigns. [5]

The campaign website informs people about Walmart’s record and invites visitors to become active members. The "Take Action" feature also allows community leaders to Adopt-A-Store and begins forming community coalitions around every Walmart location in the United States. The website is also used to form a group of current and former Walmart employees called the Walmart Veterans Association where Walmart stories can be shared. In addition, the campaign carries a resourceful blog that is updated throughout the day on news and stories related to Walmart.

In 2005, WUW also created a national association called Walmart Workers of America to advise past and present Walmart workers of their rights and help them to file complaints against Walmart. <ref name="Washington Post">Group to Form Association for Walmart Workers, additional text.</ref>

Overlapping Ideologies

Alperovitz

In his popular book America Beyond Capitalism, Gar Alperovitz defines the distribution of wealth ownership in America as truly feudal and deeply corrosive of our democracy. Data shows that the top 5% of Americans own about 70% of all financial wealth. Furthermore, the top 1% of Americans now claim more income per year than the bottom 100 million Americans taken together. <ref name="Alperovitz"> Alperovitz, Gar. America Beyond Capitalism: Reclaiming Our Wealth Our Liberty, and Our Democracy. John Wiley & Sons, Inc:New Jersey, 2005 </ref>

Alperovitz clearly expresses that our society is in a lot of trouble: escalating inequality, erosion of liberties, and growing pessimism about the democratic system. The current system simply cannot deliver its promises, and neither will traditional liberal solutions. He sketches the outlines of a new system that can sustain equality, liberty, and democracy in the coming century. This system is Pluralist Commonwealth, which literally calls for a diversity of democratic institutional forms and a centrality of public wealth holding. <ref name="Alperovitz" />

Both WW and WUW would agree with Alperovitz that giant corporations such as Walmart are to take the blame for the growing concentration of wealth and the decay of liberty, fairness, and democracy in our society. The efforts of their initiatives to push Walmart to restructure their wages, bonus, and benefits can help redistribute wealth and income in America. Therefore, they would strongly support Alperovitz’s idea of a Pluralist Commonwealth system where corporate control of capital would be replaced with new institutions of property ownership. They all share the vision that, eventually, worker-owned and community-owned businesses and a national public trust will come to hold public wealth on behalf of the working class communities.

WW and WUW also fight for retail workers to have more leisure time, because according to Alperovitz, “…there is no way to achieve a meaningful individual liberty in the modern era without individual economic security and greater amounts of free time.” <ref name="Alperovitz" />

One other ideal of Alperovitz that is shared by WW and WUW is that democracy must start from nurturing local democracy in everyday life in local communities. These groups collaborate in nationwide projects that often start with local churches and house parties, aiming to educate the public from the local level.

Only when the economy shifts from corporate control to public control can other changes follow to bring liberty, fairness, and democracy to the American workforce.

Domhoff

In Who Rules America, G. William Domhoff introduces his interpretation of class and how power is structured in the United States. In concluding the first chapter, Domhoff states that that the social upper class is an economic class based on the fact that members of the upper class are usually also owners of wealth. <ref name="Domhoff"> Domhoff, G. William. Who Rules America?: Challenges to Corporate and Class Dominance. 6th Ed. McGraw-Hill: University of California, Santa Cruz, 2010 </ref>

WW and WUW would agree with Domhoff’s statement that unequal distribution of wealth is the reason for separation of economic classes in America. Therefore, by fighting to reduce the income gap, these groups are essentially trying to challenge the domination of the “power elite” groups such as Walmart and its business partners.

Domhoff devotes chapter 4 of his book to demonstrate the role of the network of foundations, think tanks and policy discussion groups that are supported by the corporate community. <ref name="Domhoff" /> These organizations perform policy research and make recommendations to policy makers, thus indirectly involving corporate leaders in the policy-making process. WW and WUW, through providing research to educate the public, the media, and policy makers, have the same mission, but instead of the corporate leaders, they are engaging the American workforce in the process of decision making.

Yates

In his new edition of Why Unions Matter, Michael D. Yates shows why unions still matter in America. Unions strive for better wages, benefits, and working conditions for their members; they force employers to treat employees with dignity and respect; and they provide a way for workers to make society more democratic <ref name="Yates" />.

According to the definition of unions by Yates, WW and WUW both function very similarly to a labor union. Though they do not usually directly negotiate with Walmart, they provide research and organize campaigns to push Walmart to more fully embract its corporate responsibilities. Similarly to unions, WW and WUW build strength in numbers and utilize “collective bargaining,” which allows hope for a positively dramatic for labor workers across the country.

Bowles, Edwards, and Roosevelt

According to Bowles, Edwards, and Roosevelt (BER), an economic system must be judged using 3 criteria: efficiency, fairness, and democracy. <ref name="BER"> Bowles, Samuel, Richard Edwards, and Frank Roosevelt. Understanding Capitalism: Competition, Command and Change. 3rd Ed. New York: Oxford UP, 2005 </ref>

• Efficiency means getting the most human satisfaction with the least use of material resources. The efficiency of labor refers to the level of output can be produced at a certain level of work effort. <ref name="BER" /> Though WW and WUW do not directly address the shortcomings of efficiency under capitalism, they seek to improve the overall human satisfaction of workers by improving wages, benefits, working conditions, and leisure time. This increase in human satisfaction will result in a slight decline in benefits for the corporate leaders that they will have to accept.

• Fairness typically means equality of opportunity and benefits. Capitalism’s avoidance of fairness is a major fault. In the capitalist systems, corporations such as Walmart own the majority of wealth and have major influence over political and economic institutions. Besides working to improve wealth for workers, WW and WUW provide education for policy makers in hope that the government would be more balanced in terms of which side the policies favor.

• Democracy is also an important value that is represented by equality of access to participation in social decisions. BER defines a democratic firm as one that is “owned by its employees and run by people who are elected by the employees.” <ref name="BER" /> Using this framework, Walmart falls short because its employees have very little power over the production and distribution process as well as their wages and benefits.

Social Justice

Social Justice is concerned with equal justice in all aspects of the society: the creation of just relationships at all levels of society; the development of structures that provide equal opportunities; the facilitation of access to basic needs such as information, services and resources; and finally the engagement in decision-making for all people. WW and WUW are organizations that function on the basis of social justice. Their initiatives strive to reduce the income gap between Walmart workers and their employers as well as to improve working conditions. These projects can eradicate class discrimination which creates a more level playing field where all workers have equal opportunities and access to information and resources, while at the same time engaging themselves in the making of corporate and social decisions.

References

<references/> Walmart Watch's Website

Wake Up Walmart Press Release