Corporations and their Harmful Impacts on

SocietyMarjorie Jobson

Khulumani Support Group

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

• 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

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.

An Example:Production, marketing & sale of SSFFC Pharmaceutical Products

S = SubstandardS = SpuriousF = Falsely LabelledF = FalsifiedC = Counterfeit(As defined by the WHO)

ii) By Protecting Profits versus the Public Interest

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)

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

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

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

Corporations, Environmental Sustainability & Social Justice in South AfricaThe 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.

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

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

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