How MNCs contribute to the undemocratic concentration of wealth & power... Inequality drives status insecurity, which fuels the consumerism that is destroying our planet. But the things we buy aren’t making us any happier: the link between economic development and real improvements in quality of life is broken in rich societies. For real improvements in wellbeing, we need a more equal society, which is best achieved by putting democracy at the heart of the economy. The extension of democracy into economic institutions is the next major step in the long project of human emancipation.

1. Corporations and their
Harmful Impacts on
Society
Marjorie Jobson
Khulumani Support Group

2. How MNCs contribute to the
undemocratic concentration of wealth &
power
i) By avoiding tax – through setting up
multiple subsidiaries or
by sending profit into tax havens
ii) By protecting profits
in the face of scientific
evidence that safeguards
public interest

3. • Lonmin transferred significant portions of their profits into tax havens in
Bermuda concealed as “sales commissions” and “management fees” –
contributing to illicit capital flows out of South Africa of more than R300 billion in
2012 alone
• Lonmin executives avoid paying their workers a living wage while earning each
day twice the amount workers have been demanding, denying them an equitable
sharing of the profits they have helped to generate

4. i) Tax Avoidance Measures: Lonmin Example
• Lonmin transferred significant portions of their profits into tax havens
in Bermuda concealed as “sales commissions” and “management
fees” – contributing to illicit capital flows out of South Africa of more
than R300 billion in 2012 alone
• Lonmin executives avoid paying their workers a living wage while
earning each day twice the amount workers have been demanding,
denying them an equitable sharing of the profits they have helped to
generate (A living wage is on average 30% more than the minimum
wage)
• Lonmin failed to meet their obligations in terms of the Mining Charter
to build 5500 houses for mineworkers over five years.

5. An Example:
Production, marketing &
sale of SSFFC
Pharmaceutical Products
S = Substandard
S = Spurious
F = Falsely Labelled
F = Falsified
C = Counterfeit
(As defined by the WHO)
ii) By Protecting Profits
versus the Public Interest

6. Protecting public interests in the
pharmaceutical industry: A major
challenge
• Public interest is protected through the obligation on pharmaceutical
producers to meet quality standards and specifications that are reviewed,
assessed and approved by applicable national or regional medicines
regulatory authorities
• А counterfeit medicine is one which is deliberately and fraudulently
mislabelled with respect to its identity and/or source.
• Counterfeit medicines may contain correct ingredients (in wrong
amounts); wrong ingredients; no active ingredients; or insufficient active
ingredients or may have fake packaging with wrong labelling.
• The public needs packaging literacy awareness raising (See Critical
Document Analysis (CDA) : Myers J. You Can't Have a Digital Revolution
Without Critical Literacy. CANADIAN SOCIAL STUDIES, 2006 VOL40(1)

7. Other Antisocial & Unethical Practices of
Corporations
iii) Maximising sales &
consumption
iv) Capturing regulatory
authorities
v) Subverting democratic practices
by buying politicians
vi) Running rings around national
governments

8. Steps towards achieving an economic
democracy
• Legislating for effective worker representation on company boards
• Promoting adoption of living wage policies – usually 30% above minimum wage as adopted by
1,480 UK companies
• Choosing fairness policies that reduce exorbitant pay rates to management & reduce wage
discrepancies between management & workers to between 1:6 and 1:12
• Building a sense of community in companies towards transforming the experience of work,
improving productivity & creating expanded leisure time
• Redistributing wealth (through taxation measures) & reducing unearned income through
restricting share ownership to those with long-term interests in the company
• Investing a %age of profit each year into an employee-controlled trust that buys shares in the
company & providing government loans for employee buy-outs of shares
• Enforcing disclosures by tax havens of information for tax purposes
• Supporting local producers versus big brands that concentrate corporate power
• Providing incentives for democratic businesses

9. Moving towards greater equality
• Inequality generates social distance & social class differentiation &
reduces social mobility
• Status anxiety increases in unequal societies
• Inequality generates conspicuous consumption & consumerism
• Greater equality makes society stronger & generates better health
• When social needs are met, the quality of life of the people is
enhanced
• Moving towards equality transforms social relations & community life

10. Corporations, Environmental
Sustainability & Social Justice in
South Africa
The future of South Africa
depends on the country’s
ability to end social
deprivation & to manage
environmental stress,
enabling its people to live in a
space where it is both safe
and just for humanity to exist.
A significant proportion of
South Africans are living
below the social floor, while
the country has already
crossed its safe
environmental boundaries for
climate change, freshwater
use, biodiversity loss &
marine harvesting.

11. Is South Africa Operating in a Safe &
Just Space? Megan Cole
• The ‘social foundation’ for South Africa
consists of energy, water, sanitation,
housing, education, health care, voice,
jobs, income, household goods, food
security & safety.
• South Africa needs to invest in its
people and in its natural capital, while
respecting global limits. The
environment is central to the future
prosperity of all South Africans and the
country cannot move forward together
without bringing along the majority
who still live in poverty.
• ‘If you want to go fast, go alone. If you want to
go far, go together.’ African proverb

13. South Africa’s doughnut is being breached by corporate practices
including:
•Chemical pollution of water sources by agri-business
•Excessive marine harvesting
•Air pollution by excessive carbon emissions
•Land degradation through harmful land use practices
•Biodiversity loss

14. Conclusion: Making Choices
• Inequality drives status insecurity, which fuels the consumerism that is
destroying our planet. But the things we buy aren’t making us any
happier: the link between economic development and real
improvements in quality of life is broken in rich societies.
• For real improvements in wellbeing, we need a more equal society,
which is best achieved by putting democracy at the heart of the
economy. The extension of democracy into economic institutions is
the next major step in the long project of human emancipation.
A Convenient Truth, Wilkinson & Pickett,
www.fabians.org.uk/publications