After
World War II, the global economy started to shift more to a neoliberal policy,
rather than an embedded economy. This policy change had cause global trade,
finance, and business to become more desensitized to the negative effects that
having a free market has on society and the environment. This illegitimacy of
global systems is extremely bad for the world economy moving forward into the future.
Rather, the world should move toward a more embedded economy described in
embedded liberalism. More specifically, Transnational Corporations like
Coca-Cola in India are businesses that need checks and balances in the new
global economy to help preserve social systems and the environment.
Transnational
corporations employ strategies and tactics that undermine the legitimacy of the
global market. These bodies can work nearly completely unrestricted due to the
power they have globally compared to the local government enforcing the laws. The
few laws that are in place for TNCs are outdated to times directly after the
second world war, and are virtually obsolete for the economic systems in place
today. Even if companies like Coca-Cola do get confronted, they have multiple
exit strategies they can use even after abusing their power in the region.
TNCs
upset the social order, power, and environment of the countries they are in.
They displace people and land that they are building on in other countries. In
India, Coca-Cola has displaced Indian famers from fertile land and take away their
livelihoods. Not only is their means of making money or food destroyed, but
they now must work for the company or buy food from a TNC to feed themselves,
only feeding the cycle that has been put in place by the TNC. Workers who now
have to make their lively hood in these factories fare no better than those displaced
by it. They face low-wages, violations in labor laws, and horrible and/or
dangerous working conditions. TNCs typically exploit their workers, and in some
extreme cases violate human rights solely to continue making a profit. These
factories upset the local social systems put in place and disrupt the people
who live there.
These
factories also have a tremendous effect on the environment in these countries as
well, often ruining them. In India, the environmental effects of the Coca-Cola
factories has painted a common picture seen in many situations created by TNCs.
Not only does it take up land and pollute the area with industrial waste, but
like in India, they contaminate local water and food sources. People and
families are forced to drink a disappearing and contaminated water source to
survive. Coca-Cola “turned a blind eye” to all these consequences until the Indian
government could finally officially ask them to come to terms with their destruction.
Only then did Coca-Cola capitulate and offer compensation to people in India.
The
undermining of the legitimacy of the global market as caused by TNCs is why
there is a need to embed the global economy. The economy would more effectively
grow and prosper around the world if it took into consideration the societal
and environmental consequences TNCs bring with them. Also, countries where these
Transnational Corporations are would be able to grow more economically and be
able to return more to the global economy, which, would in turn pay dividends
back to those who had already had power and money to invest into these TNCs. A
very similar situation would happen with the environment as well, with more
resources and useful land that can be converted into more economic capital.
By
utilizing a system of checks and balances on TNCs in the global economy we can
further institute embedded liberalism to create a stronger economy that will
consider the needs of society and the environment. Using cases such as the case
of Coca-Cola in India, we can apply these policies further into international finance
and the global economy to create a more prosperous system where there are more winners
receiving more generous dividends.
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Even though I am not familiar with the trading system, I agree with your point. When I read your post, I understand that this company really affects the living condition of the people in India. The government should figure not to let this same problem happen in any country of the world. It is not fair for the people who were once independent and now have to depend on the Coca-cola factory. In addition to that, the company violates the freedom of the people, and they abandoned the resources that the country once had. Are there any benefits that the Coca-cola provide to the people in India? Or would this issue need to reconsider by the international law or the government within a particular country?
ReplyDeleteYou've got a strong argument,Zach!
I think that, if regulated correctly, Coca-Cola could bring a lot of jobs to whatever country they move to. They just have to use embedded liberalism to regulate the industry and think of the social and environmental consequences they may cause when doing so.
DeleteI enjoyed reading your post and I thought this was a very interesting topic to write about! I like how, in a sense, you incorporated the topics of liberalism and international law. Additionally, I really think it was interesting and crucial that you discussed the negative environmental effects of TNCs because this is definitely a significant issue globally. Do you think there might be another solution to the problem with TNCs, other than a system of checks and balances that you suggested?
ReplyDeleteAnother possible solution could be to ban or prevent foreign companies from entering your state. This would have many pros and cons, like not being able to get foreign goods, but it may increase your own industrial efforts by having to make it yourself.
DeleteI really liked reading your post and I thought the arguments you raised were very interesting. I agree that TNCs cause multiple problems within the country they chose to develop in. Of course these corporations would ideally bring in money and development to the host state, which could then could be distributed down among the general public to benefit all sectors of society. Do you have any ideas of how this outcome could be ensured, or at least become a likely result, when TNCs establish roots in developing nations?
ReplyDeleteThat's a great question, I think that possibly any TNCs that take root in another country could be required to invest a certain percent, ex. 30% of their profits or gains from the country back into efforts to improve the society or environment where they operate.
DeleteI like how you took a real world issue and connected it to what the class has taught about international politics! It was interesting to read about the trade situation in India with Coca Cola. Before reading your post I was completely unaware of the existence of Coca Cola in India never mind the clear injustices that are occurring. In a broad sense, I agree with you that transnational companies disregard human decency in order to gain profit. This is a sad reality. It likely that host countries of TNCS were completely unaware of the damage that would be done. What is happening with India and Coca Cola reminds me of sweat shops that companies like Nike and Apple use in Asia. Would the system of checks and balances you propose have the same regulations for sweat shops or do you think it would be better to alter the system of checks and balances in order to make change and protect workers in the sweatshops?
ReplyDelete