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Executive power

By Sharon Beder - posted Friday, 9 June 2006


Recently the Sydney Morning Herald reported on studies that show how "the aristocrats and capitalists of the industrial age have been supplanted by the working rich, particularly the superstar chief executive officer".

What is perhaps of more concern than their super salaries is the way these same superstar executives are increasingly supplanting the role of government policy-makers and exerting political power by mobilising and organising business coalitions.

CEOs and corporate executives, doubling as directors of multiple companies, are providing the leadership for a new corporate class that is changing not just the rules of trade and investment, but also who can own public services and what social and environmental protections are appropriate.

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The business coalitions they form and join enable common goals and strategies to be worked out; public relations campaigns to be co-ordinated; and conducive government policies to be decided. But most of all they seek to present a combined and powerful voice for business in order to pressure governments to adopt those policies. Companies that are theoretically competitors in the market, co-operate with each other to protect business interests against democratic regulations and restrictions.

The US Council for International Business (USCIB) noted that, "Leading American companies increasingly recognise that, to succeed abroad, they must join together with like-minded firms to influence laws, rules and policies that may undermine US competitiveness, wherever they may be". In this way "USCIB members can lower the costs of doing business abroad and enhance their long-term profitability".

Not all business coalitions are nationally based. Several are international and promote the interests of transnational corporations on a global stage. This has been particularly evident in the push for free trade and globalisation where the many corporate coalitions are closely networked with overlapping memberships and shared leadership.

The corporate executives who co-ordinate these coalitions and networks are powerful within the corporate community because of their top-level management positions within large corporations, their board membership of other large corporations, and their leadership positions in various business associations. Because of these multiple positions they are able to network with others in similar positions and mobilise resources.

One of the earliest models for this grab for corporate power over policy-making occurred in the area of free trade in services. The whole idea of “trade in services” began with the CEO of American Express, James D. Robinson III, in the 1980s. He and AmEx Vice President Harry Freeman enlisted the CEOs of Citicorp and the American International Group (AIG) in his campaign to get financial services included in the General Agreement on Tariffs and Trade (GATT) negotiations.

These executives broadened their coalition by creating the idea of a services sector which included fields as diverse as entertainment, engineering, transportation and finance. They coined the term "financial services", promoted the use of the term "goods and services", and encouraged government statisticians to collect data on the new concept of the services sector and its importance to national economies.

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Robinson later became chairman of the Advisory Committee on Trade Policy and Negotiations, which oversaw the US GATT negotiations. He and Freeman formed the Coalition of Service Industries (CSI) and the Multilateral Trade Negotiations (MTN) Coalition, both of which were headed by Freeman.

These coalitions played a major role in writing the General Agreement on Trade in Services (GATS) and getting it included in the World Trade Organisation (WTO). GATS aims to open up the provision of all services, including water, electricity, education, waste disposal and health care to foreign companies. Governments decide which service sectors they will open up, often without any public consultation or parliamentary vote, and the decision cannot be reversed, even if the majority of voters in a nation want to do so.

The success of the CSI subsequently spawned like organisations around the world including the Australian Services Roundtable and the European Services Forum. Freeman and the CSI went on to form other coalitions also, including the Financial Leaders Group and the Global Services Network.

Today these powerful corporate coalitions continue to push for nations to open up more of their service sectors to foreign companies. Similar and overlapping corporate coalitions and networks, coordinated by key corporate executives, are pushing for business-friendly trade agreements on foreign investment and intellectual property.

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About the Author

Professor Sharon Beder is in the School of Humanities and Social Inquiry at the University of Wollongong. She is author of several books including This Little Kiddy Went to Market (UNSW Press, 2009), Global Spin (Scribe, 2002), Suiting Themselves: How Corporations Drive the Global Agenda (Earthscan, 2006), Environmental Principles and Policies (UNSW Press, 2006) and Power Play: The Struggle for Control of the World's Electricity (Scribe, 2003). Many of her articles can be downloaded at http://herinst.org/sbeder

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