Transnational Corporations In International Relations

Introduction

Many schools of thought and individual researchers have reached the conclusion that state-centric approaches fail to examine and analyze international elations as they have changed in the past century. The different leakages of the state-centric theories like the fact that states nowadays are multinational and are not constituted by only one nation (Baylis et al, 2008) in combination with the existence of other entities in the international arena apart from states has created the need of a theory that acknowledges those facts and tries to explain international relations in the new and more complex developing environment.

Non-state actors are these international organizations that have diplomatic power and enact with states in the global environment (Kegley and Wittkopf, 2004). The position developed in this paper aims to debate whether transnational corporations are important non-state actors and in which ways they exert power over states.

Transnational corporations : A theorist debate about their role as non-state actors

Viewing the existing literature on the topic one identifies that different schools of thought have positioned themselves on the matter of non-state actors with diverging and many times pretty unclear opinions. In the specific case of transnational corporations neo-institutionalists generally disregard their power whereas they consider the importance of Intergovernmental Organizations (IGOs) and academic communities in international relations (Bas, 2000). Likewise Neorealists keep a very state-centric perspective dismissing the possibility that non-state actors actually play an important role in forging the transnational map of alliances and cooperation all over the world. They acknowledge the influence non-state actors have on states but they consider that they do not have international power independently of their country’s influence (Willets, 1982). Socialists on the other hand tend to be divided. We face the case of Negri (2005) who goes to the extreme of glorifying the power of corporations and diminishing the power of states and at the same time the case of Boron (2005) who persists on the state-centric ideology. He points out that even though transnational corporations exert power more than half of them are legally incorporated as companies belonging to specific capitalist countries. Also, he points out that these companies’ managerial positions are mostly occupied by citizens of their own home country and not of the different countries in which the companies have expanded their operations. So we see that as socialism is concerned there is no clear line that its ideologists follow and no clearly formed regime concerning the role transnational corporations play in the international arena. Marxist theorists seem to be likewise confused. Baran et al (1967) express their belief that multinational corporations are key players in the division of global power and diplomatic influence. Nevertheless this opinion is not shared by the movement as a whole since some other Marxists generally tend to ally better with the more state-centric perspective (Jackson. and Sorenser, 1999).

Apart from these schools of thought mentioned above, other institutions have tried to identify the role of transnational corporations in global politics. The Council on Economic Priorities has tried to identify the role private equity organizations play when they operate in grey zones or in countries with unstable or week political environments (Avant, 2007). A paper was created towards giving a guideline to these organizations about how to “behave” in order to eliminate or at least smoothen the existing political crisis via their operations. This action underlies many assumptions and debatable points. Since international relations have been traditionally studied to explain war between states and since war nowadays takes place mostly between other actors and states and not states themselves we can easily identify a switch in the transnational arena. Nevertheless the impressing point is that when other states and organizations like the NATO or EU are unable to solve political issues and bring tranquility back to the grey zones transnational corporations are asked to play their role. This shows the power these companies have over local communities and furthermore to the international community. If help is asked from corporations then there has been an upcoming stream of state power being delegated to those corporations.

The ways transnational corporations exert power

Many academics have argued the importance of transnational corporations in the financial and even cultural stability of countries. Multinational corporations have managed to merge the economies of different countries (Willets, 1982; Kegley and Wittkopf,2004) since the composing factors of sovereignty have been gradually reduced. Actually one can trace these changes in events happening to the world even in the past few years.

The first component of a state’s sovereignty is its ability to control its imports and exports or otherwise called foreign trade. As with the recently unveiled scandal of Siemens corporation in Germany Greece and many other countries we can see that the German government was unable to control the activities of it’s employees and the company’s “unethical” behavior in transnational trade (unknown,2008). Even though Siemens is a German legally incorporated company the fact that it’s operations are done in various countries with different legal and political frameworks gave the company an extraterritorial perspective. It’s alliance with state governments and state officers shows the degree to which transnational corporations have power in creating or altering legislations to meet their own ends.

The second and very important element of sovereignty is the ability of a state to control its own currency. As oil prices jump higher every day many countries face the problem that inflation rapidly grows in their state economies reducing the buying power of their currency ( Anastasiou,2008). Also the continuous fall of the dollars value as opposed to the value of the euro and the financial crisis this has created in the United States of America shows how vulnerable the value of currency has become even in the most financially self-ordained states of the world. Literature has been developed in newspapers suggesting that Chinese transnational organizations seem to retain the price of the dollar and not let it reach even lower levels (Ramos, 2008).

In a global level though, one can identify