And these technocracies, these transnationals, do not meet any of the academic definitions of capitalism

JOHN RALSTON SAUL ON
TRANSNATIONAL TECHNOCRACIES

Transnational companies do not meet any of the definitions of capitalism. The people who have been lecturing us on the need to be capitalistic and to take risks work for corporations which are not capitalistic. The transnationals are run by business school technocrats, bureaucrats and managers. They are employees. These people don't have any shares, they don't risk anything. The only shares they've got they got either free from the company, or by borrowing money from the company.

That's not what Carnegie or Rockefeller meant by capitalism. Transnationals are big, expensive and lazy bureaucracies which are not owned in a capitalistic manner – that is, ownership of the means of production.

They're owned basically by two groups. They're owned through the stockmarket by people who buy and sell shares. There's nothing wrong with a certain amount of speculation. You buy shares, you sell them, you hope to make a profit. But you're not actually buying these shares because you want to control some major corporation or be there on a regular basis. You're just hoping to make a few bucks. It's called speculation. You're nothing to do with those corporations in a capitalistic manner.

And the other large group are the funds, the pension funds etc. They’re bureaucratic organisations and they're not buying and owning in a capitalistic manner. They're like large icebergs floating around the oceans of the world bumping up against countries and doing damage to them, with no particular agenda except to get bigger, and to provide retirement for a large bureaucracy which sits on top of the iceberg causing it to melt a bit.

How do transnationals live? They don't take risks, they don't do R and D, they don't have much imagination and they don't have any capitalistic characteristics. They're rather like vampires - they buy a lot of real capitalistic companies that are owned by real people who have shares and take risks, and are doing R and D. They buy the companies before they get too big so they're not too expensive and then the transnationals suck the blood out of them. They buy two or three and after a couple of years they've sucked all the blood out and they're feeling rather slow so they buy some more.

And in the process they stop our mixed economies from developing. This is because they're buying all these companies - the medium big companies of the future - much too soon, and thereby aborting in a way the development of our economy. It's one of the main causes of the economic crisis that we're in, that these transnationals are buying up the real intelligence and force in our economy.

They keep themselves going by pretending that they're being capitalists. Mergers and acquisitions are inflationary activities which have nothing to do with capitalism, with investment, with creation, with risk. It’s usually done by indebting the company bought. That debt actually holds those companies back after they’ve merged from doing anything interesting because they have much larger debt ratios than any government. It's the debt of the private sector which is out of control.

Transnationals live by encouraging privatisation, which allows these extremely lazy and not very imaginative people to get hold of fully developed utilities which don't require any risk or imagination and they're able to sit there and basically clip their coupons as you flush your toilets.

So we're through privatisation. There are many ways of moving if you think governments are too big. Things like water can be moved out of government into an independent area of the public sector where there’s a rotating board of citizen directors of a non-profit organisation. That can be done if you're worried about how heavy government is. But by moving it into the private sector you're bleeding real investment capital on the private sector, you're rewarding laziness and you're rewarding these managers who go about in capitalistic drag.

AND ON GLOBALISATION’S THREAT TO DEMOCRACY.

Globalisation as presented and advanced doesn't have to exist. It's anti-democratic and is a failed experiment. There is an enormous danger in denying that failure, and denying the fact that markets are not self-regulating. They never have been and never will be self-regulating. We've been at this for 2500 years, we kind of know.

Democracy was built on the nation state. Every power removed from the nation state without a compensating international power for the citizens is an anti-democratic move. The primary tool which we need is an international agreement on minimum taxation levels for transnational corporations. Because if you analyse the tax base of your country you'll find that the corporations have moved from paying about 50 years ago somewhere around 45 per cent of the income tax, to now paying somewhere around six or seven per cent. That's why you can't afford the public education, that's why you can't afford that Medicare, that's why you're slipping into two-tier health care.

And that is not a left-wing argument. Every decent, real conservative of the last 150 years believed that you had to tax the real sources of wealth in order to fund the real necessities of the democratic state.

The social contract is not actually rooted in the nation, it's rooted in the responsible individual citizen, and it's through their activities together that they produce the social contract. None of this has been through the hypnotic clarity of false choices, none of this is done through consensus.

Ideology is like consensus. Democracy loves dispute, argument, difference, the absence of truth. International treaties based on theories which are not built upon the idea of the citizen are anti-democratic. Democracy requires putting economics and self-interest (which we need) in a subsidiary position. That's the best recipe for stable prosperity.

Democracy requires a careful identification of reality and of our limitations, a careful rebalancing of priorities at the international level. It requires binding agreements regarding the public good at the international level. These are the practical elements which enabled us to build the democratic nation states, and it's precisely those same practical elements which will enable us to build stable fair citizen-based global arrangements.