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In 1886 a landmark decision by a US court recognized the corporation as a 'natural person' under law. The 14th amendment to the Constitution: 'no state shall deprive any person of life, liberty or property' -- adopted to protect emancipated slaves in the hostile South -- was used to defend corporations and strike down regulations. FREE TRADE Unchecked capitalism ran rampant, and by the end of the 19th century railroad tycoons and robber barons were in charge of monopolies and cartels. So much so that the health of capitalism itself was threatened. Massive labour unrest was brewing. In the US, antitrust laws to break monopolies were brought in. Taxation and tariffs were raised and state regulation crept in once more. However, one railroad executive observed that regulation was good only 'in order to impress the popular mind with the idea that a great deal is being done, when in reality, very little is intended to be done'. STATE INTERVENTION The labour movement, the depression of the 1 930s, World War Two and the creation of welfare states in Europe all saw the return of state intervention. However, European and US corporations controlled land, military forces, ports and railroads in poorer countries. Hence the name 'banana republics' given to countries like Guatemala where United Fruit backed a right-wing coup in 1953. Nevertheless independence in former Western colonies after World War Two led to aggressive protection of their domestic industry in the name of development, as well as restrictions on foreign investment. In the US, social activism in the 1960S pushed forward demands for environmental and labour standards, as well as some break-ups of monopolies. Overall, between 1950 and 1980 social welfare provision and state intervention to regulate economic activity were widely accepted as economic orthodoxy. THE NEOLIBERAL ERA In the 1970s Milton Friedman and his 'Chicago School' economists developed ultra free-market ideas based on deregulation and privatization that harked back to the laissez-faire capitalism of the 19th century (hence the term 'neoliberalism'). This was to become the economic orthodoxy of globalization. In the early 1980s the full political resources of corporate America mobilized to regain control of the political agenda and the court system. Thatcher and Reagan, using the Chicago School ideas, made the world safe for corporations. They dismantled the social contract through tax cuts, ignoring unemployment, rolling back social welfare and increasing privatization. The debt crisis of 1982 gave the US its chance to dominate the world economy and for the rich nations to re-subordinate the global South through 'structural adjustment via the World Bank and the International Monetary Fund. GLOBALIZATION The power of transnational corporations is greater than that of many nation-states. The most important battles over deregulation take place at the global level with free-trade agreements such as NAFTA and those of the World Trade Organization (WTO). The level of mergers and monopolies are reminiscent of the end of the 19th century. However, now as then, social movements and resistance to unrestrained global capitalism are also growing, questioning the legitimacy of corporate rule.
Sources: David Korten, When Corporations Rule the World, Earthscan, London 1995; Jeffrey Kaplan, The Short History of Corporations, Terrain, 1999; Daniel Bennet, Who's In Charge?, POCLAD, London. COPYRIGHT 2002 New Internationalist Magazine