Empires of Profit - Commerce, Conquest and Corporate Responsibility

Abstract: Empires of Profit deals with a topic that is especially relevant today - the spread of western style capitalism across the world, and the responses it evokes in the developing, and to a lesser extent, in the developed, countries. The propagators of capitalism today are the multinational corporations; and some of them wield more economic power than many countries. More and more, multinational touch the lives of people around the world - they provide employment, goods and services, exploit natural resources, pay taxes, and influence public opinion and government policies. Today, it would be difficult to find a country where multinationals do not operate.

 

About the Author: Based in London, Daniel Litvin has degress in philosophy, politics and economics from the London School of Economics and Oxford University. He specialized in human rights policy with Rio Tinto (a mining MNC) where he was the CSR agent. He is also a former, prize-winning environment and resources correspondent for The Economist.

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In addition to local complications, multinationals face pressures from groups in their home countries - at the time of the East India Company, it was the missionaries and reformers who wished to convert and civilize the heathen in the colonies. Today, there are environmentalists, humanitarian groups, and other NGOs who pursue agenda of their own. Balancing these conflicting pressures, even while ensuring the continuation and profitability of the operations in diverse host countries is a tricky act, and according to the author, one which few multinational corporations have mastered. The author does not portray the multinationals as monsters; even the worst of them, at some point or the other, showed some interest in the 'natives'and their concerns. Alongside the many greedy, corrupt and ambitious men (the characters discussed in the book are almost invariably men), there were at least some others who had a relatively - for their time - enlightened view of things, and believed that they had a responsibility towards the societies and the people in the countries in which they operated.

The story of the English East India Company in India is well known; the company began as a trader, and ended up as the ruler of the country. Initially, the company had no intentions of becoming an imperial power - indeed, the company's directors attempted to steer clear of local political entanglements.

However, a combination of personal ambition and greed, circumstances, and ignorance of local conditions on the part of the top management of the company (aided by the extremely slow communications between India and the home country) led to the merchant becoming the imperialist. As a result, some men became obscenely rich while millions sank into poverty, and many of the social and political structures in India were destroyed. Little would the merchants who incorporated the English East India Company have imagined that their commercial ambitions would have such wide reaching and long-lasting consequences! And so it is with most of the examples in the book. The multinational enters as a trader; but soon, political, personal and commercial considerations tempt or force the company to meddle in local affairs. If one goes by the examples in the book, the interventions are often ham-handed, and made with little understanding of the local social and political realities. In the short term, the company may see its objectives being met, but in the longer term, the consequences turn out to be quite different from what were originally intended - and often harmful to local society and people. The multinational corporation, once it begins dabbling in local politics, is sucked into deeper complications , almost against its will. Ultimately, in the long term all this meddling probably does not help the company either. For example, the author describes the 'circularity'of the English East India Company's strategy in India.

The company wanted to control more and more territory, believing that it would lead to greater revenues and profits; but, to administer the territory it acquired, it was forced to spend more and more on the military and the bureaucracy; this in turn forced it to look to gain more territory, to cover its rising costs; and so on, in a spiral that ultimately led to its destruction. In India, one of the legacies of the English East India Company is a general, all pervasive distrust of multinationals; which, it must be said, appears to be justified if we consider the activities of some multinationals (for example, Enron and the Dabhol Power Project) in the recent years.

Among the lessons we can learn from the stories in the book, there is this: Greed and ambition are not confined to the employees of the multinational corporations; almost always, there are locals eager to become willing accomplices to the designs of these organizations, in order to further their own political and commercial ambitions. Without such local support, it is difficult to see how any of the companies described in the book could have taken root and thrived in their host countries. In such cases, it is also difficult to determine who exploits whom. It could be that the locals exploit the multinational's ignorance about the host country (and the company's greed and ambition); the company exploits their local accomplices'lack of global experience and ignorance about the realities in the home country (and, of course, their greed and ambition). But by the time the sagas play out, the endings are never what the protagonists intended.

A final thought; the book essentially deals with the failures of multinationals in dealing with the complexities of societies and cultures in the developing countries - failures that culminated in setbacks and tons of adverse publicity for the companies involved. Successful interventions, presumably involve more subtle moves, which will not come to the notice of the general public and the press. So, the successful manipulators are probably the ones we do not know about. Certainly, there are any number of powerful, successful, and low profile multinational corporations operating in India and other developing countries. Are our societies and institutions being manipulated by their invisible hands? Or, could this be just another conspiracy theory?