The case for corporate reparations

Global banking group Barclays has just paid 33 billion rand (£2.9 billion or $5.5 billion) for a controlling stake in South African bank Absa, a cash injection that supporters of the deal have hailed as good news for Africa’s largest economy. Critics have slammed the deal as likely to benefit mainly foreign shareholders and lobby group Jubilee South Africa have called for Barclays to pay reparations for doing business with the apartheid regime. In the context of overwhelming corporate power devoid of ethics and based on the primacy of profits, this article charts the strong moral case to be made for reparations from corporations who cause suffering because of their actions.

Let's not kid ourselves. This world's socio-economic engine runs on capitalism, and corporations are driving the bus. Ever since the end of the Second World War, the power of transnational corporations has been in the ascendancy while that of organised labour, civil society, and the State has declined.

This rise - the spreading reach of financiers and businessmen into every corner of the globe, with no place free from a Coca-Cola sign and a marketing team - of corporate power in the latter half of the 20th Century has been well documented, starting with Dwight Eisenhower's prophetic warning in 1961 about the domination of America by an military-industrial complex. The fact that Eisenhower only warned the American people after serving as President hints at, even back then, the dark power of corporations to muzzle 'elected' politicians. Noam Chomsky, Gore Vidal and others have since charted the rise of the corporate (and branded) sun, an ascent yet to reach its apex.

The fall of the Berlin Wall and the subsequent end of an alternative to Yankee-style capitalism - known for its neo-liberal, trickle-down theories of economic nirvana and pushed, punted and rammed home by IMF and World Bank bureaucrats - marked the beginning of a sustained process of hyper-consolidation of corporate power and the total integration of each local economy into one financial system. We've noted and tagged this process. We've given it a name, globalization.

And it is a process accountable only to a specific minority, the shareholders of the transnational corporations that are leading the global economy. Shareholders, it might be pointed out, are almost always interested in one thing, the maximisation of profit in the shortest period of time possible.

The 1990s saw not only the opening of virgin markets in Eastern Europe, Russia and elsewhere, but also the increasing use of stock options as an incentive for corporate management. Whether by design or by accident, stock options for management has resulted in an alignment of the interests of corporate brass and of shareholders -profit. Neither God nor glory factors into today's equation. The days of the wise chairman of the board, the old man who had built the company up from two pots and a piece of string, looking after the community that had spawned his company are lost in legend and myth. At most, modern transnational corporations have only the faintest of ties to geographical locations or people. They have become divorced from communities, economically, politically and ethically.

An ethical transnational corporation is an oxymoron. When risk analysts sit down at conference tables, the end result of any corporate action is assessed according to profitability factors. If it does not make a profit (or a small profit at high risk), an action is deemed unworthy of pursuit. The converse is also true; highly profitable actions at the lowest possible risk are extremely attractive. The ethical component of an action is not considered, and, if it is, it is usually weighed in as a risk factor (i.e. the bad press and damage to a brand that an unethical action (like using sweatshop labour) can cause). In all cases, the determining factor is profit.

Not all organisations or groups of human beings act in this manner. In fact, most don't. The ethical considerations of actions are at the fundamentals of a lot of decision-making. For example, societies often try to build legal codes on their moral codes. Aristotelian ethics and politics are quite explicit on this point; the reason behind legislation is to make men and women moral. At the very least, it is hoped that laws reflect society's morals (what those morals are is at the heart of most major disputes within communities), although this is often subverted by the vested interests of politicians and their backers.

Philosophers and religious leaders for millennia have been promoting the primacy of morals; one should do A because A is the morally correct thing to do. While it is very hard to implement morally right actions all of the time, most people make an honest attempt at a near instinctive level.

Transnational corporations do not subscribe to this primacy of morals. They believe in the primacy of profits, and that is why we see, over and over again, transnational corporations working with immoral regimes and engaged in shady practises. From no-bid contracts in Iraq, to oil for the Burmese junta and its tanks, to sweatshops in Central America stitching branded sneakers together for First World teenagers, corporations are engaged in immoral activities, working in collusion with unethical parties. Why? Because it is profitable to do so.

The abolition of transnational corporations is not an achievable goal in the short or even medium-term. Not only will this not occur any time soon, the likely outcome of globalization is, ironically enough, the withering away of the State. The signs are in contracts and budgets across the world. Governments have been increasingly outsourcing their traditional activities - those actions which seek to achieve the public good - to corporations; social services, such as healthcare and rubbish collection, have been outsourced to private companies on the economic argument that the private sector is more efficient (read cost-effective) than the State. Even the core of the State and its monopoly on legitimate force, is slowly being outsourced. The cutting edge of penal theory deals with how best to outsource the prison system, in its entirety, to private firms that transport, house and discipline inmates. The world's most powerful military moves these days with a critical baggage train of private companies that do everything from transport and cooking of food, to maintenance of military equipment, to the provision of ‘security consultants’.

Citizen pay taxes in return for protection and various social goods (healthcare, education, etc.) from the State. The State now pays the private sector to deliver these social goods and protective services. Sooner or later, someone will decide to cut the middleman out of this equation.

Further, governments are rapidly losing the ability to set their own economic policies, except within pre-determined limits. Economic policies that are unfriendly to corporations (living wage, perhaps) can provoke massive capital flight in the short-term and disinvestment in the longer-term. As many jobs have become tied (often through contractors and other such middlemen) to the activities of corporations, capital flight and disinvestment means job losses and, possibly, economic collapse. This economic threat has resulted in countries throughout the developing world scrambling over each other to provide the cheapest labour with the kindest corporate tax system. This is George Monbiot's infamous race to the bottom, and it is a direct result of the economic power that corporations hold over governments. In attempts to change the behaviour of corporations, civil society and organised labour are often lashed with a variant of this argument; if you don't stop criticising corporation X, it will leave these shores, the global business community will lose confidence, foreign investment will dry up, and the whole country will descend into an economic crisis of dust bowl proportions.

Corporations, on this analysis, are entities 1) with a overriding concern for the maximisation of profit in shortest possible time frame, 2) that do not believe in the primacy of morals, and 3) are so exceedingly powerful that it is possible to conceive of them replacing the State, let alone influencing government policy.

Enter the issue of reparations.

The concept of reparations is rather simple. It states that if damage (suffering) occurred because of an entity's actions, that entity should pay reparations to those who suffered. Various civil society groups across the globe have applied this concept in several different contexts: Creditor countries should pay reparations for imposing odious and crippling debt on debtor nations. Colonial powers should pay reparations for colonialism, slavery, plundering of national wealth, etc.. Polluters should pay reparations to those who suffered from their pollution (for example, victims of groundwater contamination). The concept of reparations is not an economic or political concept; it is a moral concept; the perpetrator of suffering inflicted on others needs to make amends. This is a basic moral precept: If you do something wrong, take responsibility and, if possible, try to correct the situation.

The case for reparations from corporations has many angles, but one of the most current is that corporations must pay reparations for their support (direct or indirect) of illegitimate regimes. The case is, perhaps, strongest in terms of direct support.

Corporations that support illegitimate regimes are committing fairly serious moral violations. For example, an oil company pays royalties to a military dictatorship. The revenue from these royalties is then used to purchase guns and tanks, which are then used to suppress the population. Why is this an example of a moral violation? After all, the corporation wasn't (via its employees) doing the actual suppressing, and it was doing nothing illegal. It was operating within the law of a sovereign nation.

The latter objection falls away quite quickly. The case for reparations is a moral case, and is independent of the law. Throughout history, including the modern era, there have been a variety of laws that make some of the most immoral acts legal; the Apartheid system was one such legal framework. The concept of reparations relies on a primacy of morals, not that of law.

It is the former objection that has more strength, and it is here that the relative power of corporations comes in. Countries cannot easily force transnational corporations to purchase a particular bond. Countries, especially in the developing world, have a hard time telling transnational corporations what to do in general. Corporations can move domiciles, threaten to disinvest, choose not to deal with illegitimate regimes. When corporations deal with illegitimate regimes that commit human rights abuses, they do so willingly and knowingly. They are like gun stores that sell weapons to the enraged husbands of cheating wives; there's only one reason why such individuals want to buy 9mm pistols and fistfuls of hollow-point rounds; there's only one reason why the South African Defence Force issued bonds in 1976.

Corporations that continue to support illegitimate regimes do so in full knowledge of the ramifications of their support, and do so despite having the ability to do otherwise. And, for this, they must pay. This demand for reparations from corporations is a part of wider attempts worldwide to impose morality on corporations. This will be resisted, mostly due to their non-acceptance of the primacy of morals; business, as they are fond of telling us, is war, and all's fair in love and war.

They are wrong. This world does not belong to them. It does not move according to the dictates of currency traders in New York, London and Tokyo. This is our world. It is for all human beings equally, and what makes us special is not that we crawled to the top of the food chain or that we can travel to the moon and back again or that we can bet on the futures market. What makes us special is that we are the only form of life we know of that can differentiate between good and bad, between the virtuous and the wicked, and then act accordingly. Without this, we would be nothing more than a bunch of particularly vicious apes. The belief that human inventions such as corporations and capital are different, are immune to moral judgment and action, is the great public relations trick of our times.

* Tristen Taylor is the Apartheid Debt and Reparations Campaign Coordinator at Jubilee South Africa, which is currently embroiled in a campaign to force Barclays National Bank Ltd to address and pay reparations for its Apartheid past. The views in the article above are his and are not necessarily those of Jubilee South Africa.

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