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The Prophet of Corporate Globalisation

In the 1930s, a little-known economist proposed a new global system to expand the power of capitalism by restricting the rights of ordinary people – and inspired the corporate overthrow of democracy.

In historical archives, we came across many people who had helped create international systems and strategies to enhance the scale and power of corporate empires. They included the German banker Hermann Abs, who travelled around the world to rally support for his idea for a new global ‘Capitalist Magna Carta’ and justice system to enforce it; Irish entrepreneur Brendan O’Regan who lobbied his national government to allow his town to establish a Free Zone that would inspire China; and World Bank presidents who pushed for the creation of a new branch to invest international development money, supposed to help end global poverty, in private companies. 

While the big companies that would benefit included well-known names—from Lidl, ‘Europe’s Wal-Mart’, to the banana giant Chiquita—few of these systems’ pioneers had household names, though they were key to helping us understand this story. This felt especially true for Eugene Staley, an American economist who in the 1950s would join the Stanford Research Institute (SRI) think tank that was a co-organiser, with TIME magazine, of the San Francisco conference at which Abs presented his proposal to a room including CEOs and politicians, Nelson Rockefeller and Richard Nixon.  

Born in 1906, in the tiny town of Friend, Nebraska, in his twenties Staley had traveled east to Chicago to study at what would become America’s premier 20th century headquarters for elite academic advocacy of ‘free-market’ economics. He enrolled at the University of Chicago just a few years ahead of Milton Friedman, one of its best-known graduates. Unlike Friedman—who became a famous advisor to Ronald Reagan and Margaret Thatcher—Staley’s was a name now largely lost to history.  

He caught our attention because, as a precocious 29-year-old assistant professor at the University of Chicago, he’d written a sweeping study called War and the Private Investor. It read remarkably like a planning document for much of what we’d seen around the world. It boldly recommended nothing less than a World Government to prevent ‘innumerable conflicts between native populations and foreign employers or landowners’ that he saw as inevitable as ‘the “backward” peoples grow stronger’. 

In 1935, Staley had both predicted and called for the construction of new supranational systems and strategies to protect and advance corporations’ interests worldwide. Among them: a new World Commercial Court and World Investment Bank. 

It was futile to resist the ‘world-wide sweep of capitalist development’, Staley had argued, warning that a lot of blood could be spilled as people around the world rebelled against it. To prevent this, he proposed peace without democracy—with a ‘long-range plan for world statesmanship’ to wrench power from states and give it to new supranational institutions. He criticised politicians of his day in Europe and the US for focusing on their own citizens, industries, and economic plans (be them in socialist, communist, fascist or ‘new deal’ styles). His idea was not to give more power to the people, or ensure that governments become more responsive to their citizens. Rather, he proposed new world institutions that must be ‘separate from the political ambitions and expediencies, the emotionality, and the fluctuating policies’ of states.  

A World Commercial Court, Staley had written, could give private, international investors ‘direct access’ to a new justice system to protect their interests and resolve disputes without violence. A World Investment Bank would channel money to their companies and help them to expand. He knew that these were radical ideas. ‘Are these suggestions shocking?’ he asked rhetorically. It could take decades to create this new World Government, he conceded—but, he argued: ‘work can be started today’.  

Staley’s adopted city of Chicago was at that time, like much of the US, reeling from widespread unemployment and poverty. The Great Depression threw the legitimacy of Wall Street and banks into question for millions who lost their homes, jobs, and savings. Corporations and financial elites faced growing challenges from workers’ movements in rich countries, while in colonial empires campaigns for independence grew. 

His study foresaw a turning point in world history. As the oppressed ‘wake to political consciousness’, he wrote, they will try to use ‘the power of the state’ to change their situations. This included via ‘labour codes drawn in the interest of workers’ and the ‘break-up of large landed estates’ in favour of those ‘who actually till the soil.  

Will the rights of private investors be enforced, he asked, ‘against the wishes’ of these people? If they aren’t, he predicted a new era of violent conflicts around the world, even large-scale international wars. After all, corporations by that point had already amassed experience ‘fomenting revolutions, using private armies’. 

Staley recounted corporate histories of aggression, including those of ‘sovereign companies’ that led the expansion of European empires, governed whole territories and had their own police forces. Other investors had operated in ‘special concessions’, he said, with ‘government-like authority’, imposing their will as law. In Africa, companies were acquiring large tracts of the best land, telling local farmers: ‘starve or abandon their accustomed way of life and go to work for the companies’. He asked: ‘Consider the fleets and the economic resources of some of the large fruit companies and the oil companies. Is it better to have them take over their own protection?’ 

He saw only two options: restrict international investments (though he said this was ‘utterly futile’, as well as ‘poor policy)—or create a ‘world governmental authority’ to end and prevent conflicts: from riots and strikes to armed rebellions and wars. 

We had never heard of Staley before but were struck by how he had predicted (and recommended) much of what we had been investigating. Along with proposals mirroring the international legal and development systems we’d dug into, his book had also spoken about corporate control over territory, and the use of force. Rather than challenging these trends, he seemed to propose institutionalising them.

Long-range Plans

Long before the ‘Washington Consensus’, before the creation of institutions like the World Bank, and even before the Second World War, elites gathered to lay ambitious international plans to protect their private empires and their profits from the threats posed by movements for independence and democracy around the world.  

Take for example the International Chamber of Commerce, which said it worked for ‘the integration of business and economic concerns into policy-making’. It offered companies ‘unrivalled access’ to governments, and had developed what it called ‘privileged links’ with bodies like the World Trade Organization, enabling ‘the voice of business’ to be heard there. It was founded more than a century ago, in 1919.  

In the 1920s, a ‘supranational federation of capitalists’ met in Vienna and Geneva to scheme how to protect themselves from nationalist, socialist and anti-imperialist campaigns after the First World War and amid the Great Depression. Those involved included famous Austrian economists including Ludwig von Mises and Fredrich Hayek (who, after the Second World War, would go on to found the Mont Pelerin Society to spearhead academic advocacy of neoliberalism).  

Quinn Slobodian, a historian at Wellesley College in Massachusetts, studied this period for his 2018 book Globalists: The End of Empire and the Birth of Neoliberalism. Far from wanting to ‘liberate’ private capital and destroy regulations and states—as capitalism’s standard-bearers are often believed to—Slobodian described how the people involved in these discussions sought to rewrite rules on a global scale to support their interests, and ‘encase’ or insulate them from ‘mass demands for social justice.  

In the 1950s, the infamously secretive Bilderberg Conferences began and joined the infrastructure of such elite international networking spaces. Half a century later, British Lord Denis Healey, a veteran member of this club, told The Guardian that what it wanted was to see international wars end—but it was ‘not wholly unfair’ to say they ‘were striving for a one-world government’ to achieve this. It sounded like a version of Staley’s older proposal, for a new era of world peace without democracy.   

Much better known than Staley’s 1930s proposals for a new World Government was the so-called ‘Powell Memo’. This was a memo sent in 1971 by Lewis Powell, a corporate lawyer who was on the boards of eleven corporations, to his friend, Eugene Sydnor, Jr., at the US Chamber of Commerce, the most powerful pro-business lobbying group in the country. It had been confidential, but it was leaked to journalists after Powell was nominated by then President Nixon to be a US Supreme Court judge. It became known as a key document marking the rise of ‘neoliberalism’ in the US and the expansion of corporations into what seemed like every aspect of public and political life.  

The ‘business and the enterprise system are in deep trouble, and the hour is late’, Powell had warned. ‘Perfectly respectable elements of society’, including college students, journalists and some politicians, were treating corporations with near contempt, without ‘sympathy for the businessman or his viewpoint’. Corporations, he argued, should respond with counter-attacks and by collaborating together to defend ‘the system’. Specific recommendations included advertising to ‘support the system,’ rather than individual companies or products. ‘Strength lies in organisation.’ 

Like Staley, and other people and institutions we came across in our investigations, Powell was clearly thinking long-term. To counteract threats to big business, and build a world more amenable to it, he called for ‘careful long-range planning and implementation […] over an indefinite period of years.’ 

The lawyer’s 1971 memo was influential and US business lobbies seemed to take his advice and built new institutions to shift public attitudes. Numerous new, conservative think tanks such as the Heritage Foundation and the Cato Institute were set up. Soon, the Chamber of Commerce was spending hundreds of millions of dollars a year to influence public and political debates—and Ronald Reagan in the US, and Margaret Thatcher in the UK, made neoliberalism state policy.  

Though not everyone agreed with his analysis that ‘the system’ was at risk. In the same year Powell sent his memo, US economist Raymond Vernon—later credited for providing intellectual weight for mass privatisation campaigns, and dubbed ‘the father of globalisation’—published a book called Sovereignty at Bay. The expansion of global corporations had already proceeded to such a degree, he argued, that ‘concepts such as sovereignty and national economic strength appear curiously drained of meaning.  

Also in the 1970s, the World Economic Forum joined the list of elite capitalist networking spaces, as did the CEO-led World Business Council for Sustainable Development from the 1990s. Other regional and international groups formed with names like the European Roundtable of Industrialists and the Transatlantic Business Dialogue. While details of what goes on in these places were hard to come by, their establishment and impacts had not gone unnoticed by researchers and activists. 

‘Elected by and accountable to no one, secretive and highly organized, these shadow sovereigns are destroying the very notion of the common good and making a mockery of democracy,’ said Susan George at the Transnational Institute research group in Amsterdam, describing how multinational corporations were operating ‘behind the scenes’ and looking to manage ‘world-wide public policy’. 

The key questions of our time, as British writer Hilary Wainwright put it, were ‘not just about corporate greed, irresponsible lending, or outsourcing, but also the model of the downsized state, of allowing only corporations to plan’. 

As we’d seen, from this history but also in our investigations around the world, these plans often had very long time-scales—much longer than the terms of elected representatives. The seeds of the strategies we saw in person were planted long ago.  

Staley was right that multinational businesses would only continue to grow. By 1970, there were 7,000 corporations operating across borders. By 2011, there were more than 100,000 multinational enterprises with almost 900,000 foreign affiliates. No country has jurisdiction over all of their activities. Their resources have boomed—the revenues of the world’s largest companies exceed the GDPs of most states—as has their political power through new world institutions, as Staley suggested.  

The World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), for example—which enables multinational corporations and foreign investors to sue states directly—fulfils a similar role to Staley’s proposed World Commercial Court. Its International Finance Corporation echoes his World Investment Bank.  

But the global advance of multinational companies had largely failed to deliver on promises of prosperity—and peace—for all. It was also clear that new supranational systems and strategies to secure and support private investments had not, in fact, succeeded in quashing people’s demands for democracy and social justice. 

While Staley had said a new world government would stem violent conflicts, some corporations had, in fact, continued to use physical force to get their way. Others seemed to have made violence, or the threat of it, their core business. This was what we’d decided to investigate next—corporate control over the use of force, globally.