Steven Friedman worm’s eye view No matter how clever markets get, they have not found a way to abolish people. On the right and left we are often told that we live in the age of the triumph of the multinational corporation. For the free market lobby, the power of the conglomerate is a triumph of economic reason, a signal that history has indeed ended. For the left, it is a call to destroy the corporations before they destroy us. But, as powerful as the large companies are, the market is not as all-conquering as its fans or foes suppose. Take the controversy sparked by the lawsuit in which the Pharmaceutical Manufacturers’ Association is trying to strike down the clause in the law that allows the government to import cheaper generic drugs to compete with the ethicals produced by its member companies. The case has become something of an international cause clbre. If the firms lose, health activists around the globe will hail a victory, while the new United States administration may see the need for some sabre rattling. If they win, the ruling will be seen as further evidence of the invincibility of the corporations. But the hearing will probably settle far less than we have been led to assume: whatever the outcome, drug companies will continue to feel pressure to meet at least partly the demand for cheaper medicines. Thus, while the war between the companies and their adversaries has proceeded, at least two have offered to cut the cost of anti-Aids drugs; others have agreed not to oppose the importation of cheaper drugs. If they were as powerful as we are told, they would not need to fret. And if, as some on the left claim, they can be stopped only by the power of the state, then why offer compromises now? Why not wait for the outcome of the case? Because the companies are not all-powerful. And what limits their power right now is not the might of the state or the fear of a revolution, but an old-fashioned phobia of being disliked. Activist groups, here and internationally, have conducted a highly effective moral assault on the drug companies. Rightly or wrongly, millions associate them with a grasping obsession with profit at the expense of human suffering. And, whatever the current power balance in politics or the courts, the companies do not like that. Being seen as immoral can be bad for business, even if a company has the muscle to ensure that the government does not control it. The most important reason is that, contrary to today’s market ideology, people are not motivated by the desire for money and power alone. They need to believe that what they are doing is legitimate and worthwhile that it is a source of esteem in their society. Executives, sales people or managers who fear the scorn and loathing of those around them may find it difficult to serve their companies with the expected zeal. Free marketeers may dismiss moral pressure on companies as economic illiteracy. But that does not end it. The reason was offered by a little-known Austrian, Karl Polanyi, whose 1940s book The Great Transformation, was ignored for decades, but is back in vogue. Polanyi, writing about the free market ideology of the 19th century, argued that no human society could survive if it was governed purely by the market. People, he felt, had inclinations other than self-interest and needs other than the material. If the market took over too much of their lives, society would fight back in an attempt to restore the balance between our economic needs on the one hand and our morals and interests on the other. That may well be what is happening now. However, many times market zealots warn that pressure on companies will stunt growth and kills jobs (and they do this whenever businesses are subject to pressure to restore the balance), society in the form of health activists or environmentalists or demonstrators at international conferences will insist on stressing other priorities. And, because we are not simply economic machines, people will take seriously their moral arguments and companies will become disturbed by them.
South Africans need hardly be reminded of this: it largely explains the success of the sanctions campaign against apartheid in the 1980s. The left may protest that moral pressure cannot defeat the power of the corporation. Concessions to it are merely designed, this argument stresses, to allow companies to continue making profits. Perhaps. But most of the major gains in human living standards over the past century have been made not by society destroying the power of the corporations, but by businesses making pragmatic compromises in the face of pressures. The only difference between then and now is that, at least for the moment, the pressures have changed. Then the key threat to business was the collective power of organised labour or the force of the state. Today workplace changes have reduced the power of labour while just about everywhere governments try to woo business, not to restrain it. In this vacuum society fights back not through the unions or government but through the moral denunciations of activists. Whether today’s restraints on business are as effective as those in the past is unclear. Until now they probably have not been. But we may be entering a new period of heightened moral pressure on business and it is too early to assess it. The reality that moral argument still matters in a world of transnational corporate power holds obvious lessons. For economic actors, it is a warning to move beyond simplistic market worship and to understand that business will always have to live with society and its moral values: companies that lose the moral argument are as vulnerable as those who get their marketing or financial planning wrong. For those who seek a fairer society, here or in another part of the world, the lesson is that there are gains to be made by winning the moral debate. Engaging in a contest for the moral high ground requires a politics that relies on persuasion rather than force, on creativity rather than coercion. Gains may be slow, patience a necessity. But progress may well be greater than that to be had from the defeatism of those such as many in our elite who believe corporations are too powerful to be subject to moral criticism and who thus rely on growth alone, or of those who prefer revolutionary fantasies to concrete gains. Whether we will soon again see a phase when companies will battle for ascendancy with states and mass movements is unclear. For the moment, the power of the public conscience will be the key restraint on those companies that ignore it.