The progress towards globalization are increasingly led and dominated by corporate players. A bird’s view of corporations, their functioning and their contribution to regional economy looks encouraging for all, but beneath that innocent view, lies the hidden harsh reality of corporations. Perhaps one of the lesser known facts about corporations, in a global context is that about 51 corporations worldwide have such a huge economy that they are qualified to rank among the 100 of the largest economies in the world (Anup, 2007).
Advancements in globalization aided by technology development have accelerated the growth of corporations. Corporations grow larger and multinational at an unprecedented pace, carrying with them their influence and interests. Corporations more often ignore issues, like environment, ethics and even law in their efforts to make profits. As most media companies are either influenced or owned by corporations, their propaganda is highly successful and resistance to their decisions and actions are easily scuttled.
Corporations are deeply associated with human rights violation.
With cold war being replaced by free trade, several issues gradually cropped up like increase in rich–poor divide which had rich people becoming richer and poor becoming poorer. Human rights abuses, once carried out by anti-people governments is now done by corporations, in a veiled way. History holds evidence of direct corporate support to human rights violations. Corporate collaborations of Nazi Germany included Ford, general Motors, Chase Manhattan Bank, Siemens, Bayer and Volkswagen. ITT was among the corporate conspirators who helped to overthrow democracy in Chile and establish the Pinochet leadership. Big companies most often strive to get favorable conditions by manipulating trade pacts and agreements to get larger profits using cheap labor. Paying the work force is perhaps the biggest factor in their productions costs for the corporations. Companies obviously look to position themselves wherever cheap labor is available. International agreements generally incorporate an atmosphere of increasingly cheap labor. Whenever a nation takes steps to improve their worker’s conditions, which obviously mean more costs to companies, the companies pack up. They hunt for places with cheap labor and lesser restrictions. Improving the working conditions of its labor force is not in the interests of the corporations.
The corporations’ total dedication to profits is apparent from their functioning and involvement in medical and pharmaceutical fields. Although several developing countries have many tropical diseases affecting millions of people, corporations are more focused on addressing baldness, impotency and beauty enhancement. Thus, despite a large market, companies are not interested in addressing such markets because the people there are poor who wont be able to afford such medications. Although being associated with healthcare, the pharmaceutical industry lack a humane perspective which is evident when they advocated to the U.S government to impose sanctions on the South African companies producing cheaper and more generic AIDS drugs. It should be recalled here that Aventis stopped the production of a crucial medication for late stage, fatal sleeping sickness because it could not make profits (Boseley, 2001).
Multinational corporations exert considerable influence in law making bodies of most countries. Such corporations have very close links to even world bodies like the World Trade Organizations (WTO). Such links ensure that their interests are taken care of irrespective of public welfare and public concern. An instance of such association is widely speculated as being the cause for not bringing severe laws on gun control in the U.S. Although about 60% to 70% of public opinion advocate stricter gun control laws, no important and notable gun control law has been passed, despite about 20,000 existing separate state, city and community laws on firearm regulation. Many efforts for enacting stricter laws have failed, which have been attributed to the influence of the National Rifle Association of America (NRA). It is believed that NRA defines and dominates gun politics in America since 1960. It is startling to know; to what extent the gun manufacturers would go to develop markets for their guns. Firearms manufacturers had been free till 1994 to circulate pamphlets focusing on attracting children to firearms. Emphasizing on “Start them Young”, these manufacturer gives more product details of the gun.
Certain corporations in the guise of legitimate business perform secret criminal activities mingled with legal activities to escape detection. They amass wealth through their illegal activities and use the corporation to launder their ill-gotten wealth. The world’s gross criminal product has been estimated at 20 percent of world trade. (de Brie 2000). As the corporation is only a legal entity, the person or persons at the helm of the corporation’s affairs was held accountable. The corporation lacking a mind of its own was not found capable of a crime and therefore could not be held guilty of a crime. However, this is no longer the situation today. Both, the corporation as an entity and its directors are liable for criminal acts. Corporations develop newer technologies and services, bringing in newer opportunities for crime. The crimes for which a corporation can be indicted include manslaughter, homicide, arson and theft. The corporation can also be indicted for crime if any of its top management members had authorized, committed, commanded or tolerated the crime. In 1984, a seven member US sentencing commission was set up to standardize sentences for federal crimes. The need for standardization was that, if individuals had an idea of the punishment or penalty they would receive for a particular crime, they would stay clear of crime. The commission also drew guidelines for the sentencing of corporate employees, charged with crime. These federal sentencing guidelines have brought a change in the way corporations view and deal with potential wrongdoing. Small and large businesses, banks, law firms are covered by the guidelines intended to punish violations of federal crimes like antitrust, securities, employment laws, mail and wire fraud, commercial bribery kick backs and money laundering.
Tax evasion is one of their prime strategies corporations take to raise their profits, depriving government of several billion dollars which would otherwise have been used to carry out the much needed social programs. An estimated $50 to $200 billion loss in revenue is caused each year due to corporations avoiding taxes. Corporations adopt several ways including fraud and offshore tax haven to avoid taxes. In 2000, Lawrence Summers, who was then the treasury secretary pointed out that although corporate profits had increased by 20%, the tax revenue fell by 2%. The Economist reported in March 1999 that the News Corporation and its subsidiaries had paid an effective tax rate of about 6% for the four years ended June 30, 1998, while Disney had paid 31% for the same period.
Anup Shah (Jan. 2007). Corporations [Electronic Version] Retrieved on 29th May, 2007 from http://www.globalissues.org/TradeRelated/Corporations.asp
Boseley Sarah (May, 2001) Drug Firm wakes up to sleeping sickness, [Electronic Version] Retrieved on 30th May, 2007 from http://www.guardian.co.uk/international/story/0,,486905,00.html
Questions and Answers
Q) Are corporations associated with human rights violation?. If so how?
A) Yes, corporations are deeply associated with human rights violation. They have also been instrumental in overthrowing democracy in countries like Chile. Several corporate organizations have also been recorded to have collaborated with the Nazi regime. They try to make bigger profits by using cheaper labor, through manipulation of trade pacts and agreements.
Q) What are the priorities of corporations in healthcare industry?. Are they different from those in other industry?.
A) The corporations involved in medical research and pharmaceutical fields have the same goal of making profits, just like the corporations in other fields. They don’t attach importance to finding remedies to diseases affecting millions if the affected population is poor. Research and development is emphasized even to trivial ills like baldness and impotency because these can bring profits.
Q) Do corporations avoid tax?. If so what is the estimated amount of taxes evaded by them?
A) Tax evasion is one of their prime strategies corporations take to raise their profits, depriving government of several billion dollars which would otherwise have been used to carry out the much needed social programs. Corporations adopt several ways to evade taxes. An estimated $50 to $200 billion loss in revenue is caused each year due to corporations avoiding taxes.
Q) What are the crimes for which corporations can be indicted?
A) The crimes for which a corporation can be indicted include manslaughter, homicide, arson and theft. The corporation can also be indicted for crime if any of its top management members had authorized, committed, commanded or tolerated the crime.
Cite this essay
Corporations A brief look into the role and functioning of corporations. (2020, Jun 01). Retrieved from https://studymoose.com/corporations-a-brief-look-into-the-role-and-functioning-of-corporations-new-essay