What People are Struggling Against: How Society is Organised for Controlling and Exploiting People

by Manfred Davidmann

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CONTENTS

SUMMARY

MOTIVATION OF TOP-LEVEL LEADERSHIP

DECISION-TAKING IN COMPANIES

SOCIAL SYSTEM

OWNERSHIP AND CONTROL OF MONEYS (Capital, Savings, Wealth)
Capital Taken from Customers
Ownership
Taking Possession of the Population's Savings
Ownership and Control

GOVERNMENT ACTIVITIES
Transferring Taxpayers' Moneys to Enterprises
Condoning Tax Avoidance by Enterprises
Using Taxpayers' Moneys to Pay Operating Costs of Enterprises
Condoning Tax Avoidance by the Rich
Taxing the Working Population More Severely
Serving Enterprises and the Rich

PROFIT MAXIMISING

CORRUPTED ECONOMICS

MISLEADING EXPERTS

AUTHORITARIAN STRUGGLE TO TAKE OVER AND CONTROL DECISION-TAKING BY TRANSFERRING IT TO LEADERS

Top-level Leadership Taking Over Decision-taking in Business, Service and Community Organisations

Top-level Leadership Taking Over Decision-taking from the Population

Participative Organisation: The Meaning of 'Democracy'

Decision-taking and Policy-setting within Political Party and by Government

Selecting and Electing Representatives: 'Closed-list' System of Proportional Representation

Selecting and Electing Representatives: UK Members of European Parliament (MEPs)

Take-over Struggles

AGREEMENTS BETWEEN TOP-LEVEL LEADERSHIPS
The 'General Agreement on Tariffs and Trade' (GATT)
The 'Multilateral Agreement on Investment' (MAI)
Core Findings


CONCLUSIONS
Social System
Corrupted Economics and Misleading Experts
Companies, Enterprises
Role of Government
Profit (Exploitation) Maximising
Authoritarian Struggle to Take Over and Control Decision-taking
Agreements Between Top-level Leaderships
Secrecy and Publicity
Overall

NOTES <..> AND REFERENCES {..}

Relevant Current and Associated Works

Relevant Subject Index Pages and Site Overview



SUMMARY

This main report brings together key conclusions from four studies {1-4} undertaken to obtain a better understanding of why people have to struggle throughout their adult lives, in all countries and organisations, at all levels, to maintain and improve their standard of living and quality of life. We know what people are struggling to achieve {13, 14} and so this study was undertaken to explore why people have to struggle by looking at what they are struggling against.

The report looks at the way 'Economics' has been used to misinform and mislead the general public, and looks at the role and vested interests of experts. It describes how companies (corporations) accumulate their capital and reserves from moneys taken from customers and how people's massive savings are placed under the control of others. And shows how taxpayers' moneys are used in different ways to enlarge the profits of companies.

It discusses and illustrates the internal struggles taking place in political parties and all other organisations, for achieving greater democracy and against those wishing to overpower democratic processes of decision-taking.



MOTIVATION OF TOP-LEVEL LEADERSHIP {2}

Directors are motivated by pay in its various forms, by greater wealth and by greater influence which includes dispensing patronage, and by power. The pay of directors is what owners decide to pay themselves and their directors, and increases with increasing influence and power.

Considering mergers and take-overs, we see top-level leaderships battling with each other for more power, for greater control, over people and resources.



DECISION-TAKING IN COMPANIES {2}

Owners take the profits but have transferred much of their own risk to other people, to suppliers, customers, and employees, by limiting their liability for the debts of their companies.

The person who is the majority shareholder in effect controls the company <1> and decides what is to be done and how it is to be done. So the system is organised so that a few, a relatively very few, people at the top take the key decisions.

Although a company does not take decisions it can be held responsible and can be held to account for decisions taken by individuals within it. To that extent it serves as a front behind which those who take key decisions can hide, as a front for owners and directors.

The most effective control of corporate irresponsibility appears to be the fear of bad publicity, of public awareness of socially irresponsible company behaviour, with its effect on company image, consumer trust and market share, and thus on profits. Particularly so when publicity names those responsible for making antisocial decisions within the company, and those responsible for condoning, or for omitting to restrain, the company's antisocial activities. {1}



SOCIAL SYSTEM

We see a pattern of differentials which rewards service to the owners and their establishment rather than ability or service to the community. The pay of directors is what owners decide to pay themselves. Nurses, teachers, fire-fighters and police officers are at present paid comparatively little for the work they do. {2}



OWNERSHIP AND CONTROL OF MONEYS (Capital, Savings, Wealth)


CAPITAL TAKEN FROM CUSTOMERS {2}

Customers are not given a choice. Enterprises (their owners) simply take their customers' moneys

for getting back money already spent on the business and

for expanding the business without giving the community corresponding ownership rights.

Enterprises <1> collect moneys from their customers by the simple expedient of charging more than their actual costs.

The source of profit (surplus) is thus money collected from their customers, is money which belongs to customers.

When one buys goods or services, the price includes not only the manufacturer's and supplier's costs and profits, but also includes moneys (depreciation; capital replacement) for replacing their buildings and equipment. So an enterprise collects from its customers whatever its assets like equipment and buildings have cost, doing so without paying income tax on the amounts it collects.

And enterprises (their owners) are also continually collecting money from their customers and are enriching themselves by adding these moneys to their reserves.

Shareholders would not even consider handing their moneys over to a company without in return becoming an owner of a corresponding part of the company, without getting a corresponding number of shares in return. But all these moneys are taken by enterprises (their owners) without in return giving corresponding ownership rights to their customers or the community.


Even co-operatives and mutual aid societies (building societies, credit unions) have been retaining some of their members' profits each year, for no apparent valid reason, accumulating these moneys for over 150 years <4>. By continually adding these moneys to their reserves they have become rich and powerful. Their chief executives and directors have become powerful, influential, and well paid.


OWNERSHIP {2}

Ownership laws which assign ownership 'rights' to owners have been devised by the owners themselves or by those who serve them. Ownership of land and means of production, of funds and wealth, has always been accumulated at someone else's expense. All belonged to the community, belonged to all alike.

To 'rob' is to take unlawfully. But we are here looking at moneys being taken legally and largely without the customer's (owner's) informed knowledge or agreement. What is taking place is perhaps best described by the phrase 'legalised robbery'.


TAKING POSSESSION OF THE POPULATION'S SAVINGS {2}

Company pension funds run into many GBP billions and between them own, and thus are in position to influence and control, much if not most of UK's share capital. Including company credit unions and providers of private pensions, such moneys and funds should be under the control of those who contributed and those who are contributing to them. But ultimate control, and the power and influence that goes with it, have in effect been taken from the working population and placed in the hands of those who own and control companies (corporations).

Instead of being under the control of those who contributed, these moneys are in effect placed under the control of a few people at the top who in this way gain power, are enabled to dispense patronage (and support each other), gain high incomes and much wealth.


OWNERSHIP AND CONTROL {2}

What we see is a system where owners and top-level leaderships enrich themselves by taking or using and risking other people's moneys.

This 'legalised robbery' seems to be a key feature of the way society is organised to benefit those at the top.



GOVERNMENT ACTIVITIES

Government activities serve business enterprises (owners) by

Transferring taxpayers' moneys to enterprises.

Condoning tax avoidance by enterprises (making good the loss by collecting more taxes from the population).

Using taxpayers' moneys to pay operating costs of enterprises.

And serve business enterprises and the rich by

Condoning tax avoidance by the rich.

Taxing the working population more severely.


TRANSFERRING TAXPAYERS' MONEYS TO ENTERPRISES {3}

Some employers pay wages which are so low that employees are forced to work long hours merely to survive. A government may then make up such wages with means-tested income support benefits to a poverty-existence level. Which is apparently what happened in the UK while minimum-wage requirements ceased to be applied. In such ways taxpayers' moneys are used to subsidise the profits of companies, of their owners.

Taxpayers' moneys are also used to subsidise the profits of companies when a government pays a subsidy to a company for every new employee. This is so regardless of whether the subsidy is paid as a single payment or whether it is paid for a limited period as part of the employee's wage.

Overall, the amounts channelled similarly into private profits seem large. There may be investment grants, depreciation allowances, grants in aid, tax allowances, tax-free benefits, loans at favourable terms or other ways of financial support to enterprises in industry, agriculture and the service sector.

Very large amounts are apparently handed over yearly in such ways to increase the wealth and power of a small number of people without any corresponding return to the community. They are generally given without a corresponding transfer of ownership rights and control to those who provided the money, to the community.


CONDONING TAX AVOIDANCE BY ENTERPRISES (making good the loss by collecting more taxes from the population) {3}

A multinational company can minimise its liability for corporation tax by transfer pricing, that is by making book entries which transfer profits to the country with the lowest corporation tax {5}. This tax avoidance is legal and governments have not legislated to prevent this practice.

So citizens pay more tax, the government can now spend the same amount as before, the multinational's profits have increased. In other words, the multinational's increased profits arise from moneys which are in effect collected by the government from its taxpayers.

The multinational, and this means the owners and directors of the multinational, are thus in effect taxing the people and in this way increasing the multinational's profits and thus the incomes and wealth of its owners and directors.

A unitary taxation system can overcome this tax avoidance by assessing the actual profits being generated by a multinational in a particular country. American state governments have tried to install systems of unitary taxation but, as far as I know, multinational corporations have been able to dissuade state governments from applying such systems.


USING TAXPAYERS' MONEYS TO PAY OPERATING COSTS OF ENTERPRISES {3}

The mark-up between buying or producing in a low-wage country, and then selling in a high-wage country, is often enormous <5>. Large additional profits result. Unemployment increases in the home country. There are many costs associated with unemployment such as social security payments to the newly unemployed.

It is accepted as a principle of economics that social costs have to be paid by those causing them, a well-known example being the social costs arising from polluting. So the social costs of unemployment have to be paid by the enterprise which caused the unemployment in the first place.

Companies, however, are not made to pay the resulting costs of unemployment, are allowed to pass these operating costs to the community and are thus making large profits at the expense of the community.

Not having to pay the resulting social costs of unemployment, companies can readily and socially-irresponsibly reduce wages and thus the standard of living in a country by threatening to move their production facilities to another country.

They do so for the sake of private profit but no action is taken to prevent them from doing so by recovering the social costs from them, or to deter and punish such socially-irresponsible activities by punitive penalties.


CONDONING TAX AVOIDANCE BY THE RICH {3}

There would seem to be no good or valid reason for condoning tax-avoidance by those who are rich.

What stands out is that there are ways in which the rich can avoid paying their share of the tax load. By placing their funds in offshore and tax-free locations or by locating companies elsewhere, to give just two examples.

Condoning tax-avoidance by the rich increases the tax load on the working population.


TAXING THE WORKING POPULATION MORE SEVERELY {3}

The government spends for the community the money it receives from the community, collecting it through taxation.

When owner-serving governments 'reduce income tax' for individuals and companies, it is the rich who gain much, the working population hardly benefits. One then sees that the amounts contributed by the rich are being drastically reduced.

To claim in such circumstances that government expenditure on public services has to be cut so as to make ends meet, appears to be a one-sided viewpoint.

Moneys saved by spending less on social security for those in need and gained by collecting more tax from the working population, are apparently being used to reduce the taxes collected from the rich and from companies.


SERVING ENTERPRISES AND THE RICH {3}

So what we have seen is that taxpayers' moneys are used in different ways to enlarge the profits of companies and thus of their owners, and to make the rich even richer.

We saw that companies are in effect allowed to tax the population and are also allowed to pass large parts of their operating costs to the taxpayers.

And that tax avoidance by enterprises and by the rich is condoned, the government making good the resulting loss by collecting more taxes from the working population.

Moneys saved by spending less on social security for those in need and moneys gained by collecting more tax from the working population, are apparently being used to reduce the taxes collected from the rich and from companies.

And when taxing the working population more severely, the ways in which taxation can be used to shift the tax load between income groups are numerous and often hide behind fine-sounding phrases.



PROFIT MAXIMISING

In practice directors are generally required by owner-serving laws to act first and foremost in the interests of the owners, so that it is profit which is maximised. Short-term and long-term profits can be and are being maximised. {1}

When profit becomes an overriding or sole objective to owners, directors or managers, they concentrate on maximising profits regardless of cost to others. Profits are then maximised regardless of the cost and consequences to the community, limited only by the likelihood of unpleasant consequences such as restraining fines, punitive legal punishment or adverse publicity. {1, 2}


One of the requirements for the free-market economic system to work, is that profit margins and prices need to be controlled effectively so as to protect the community from exploitation. But they are not. {2}


To owners and employers the worth of a job is what has to be paid to get it done. They want work to be done at the lowest rate at which they can get it done as profits can be increased by reducing labour costs, by exploiting employees.

Owners and employers use inflation as an excuse for reducing real wages and salaries of the working population so as to increase profits. Employees are then not compensated for increased skill, experience and responsibility, do not receive their share of the increasing national income and wealth. UK pensions have now to be increased by 34 percent just to reach the level at which they should be now. And pensioners still have to be compensated for the moneys withheld from them without good reason by the government since 1980. This attack on the living standards of the working population is misleadingly called a 'fight (or battle) against inflation' to persuade the working population to tighten its belts, to reduce its standard of living, so as to increase profits. {1}


So owners and employers will, when they can, pressurise the working population into accepting even lower rates of pay by increasing the working population's needs. Doing so by advocating greater unemployment, reducing social security, reducing national health service provisions, weakening the quality of education (knowledge, clear thinking, understanding, objective evaluation). {1}

And, as said already, moneys saved by government by spending less on social security for those in need and moneys gained by collecting more tax from the working population, are apparently being used by owner-serving governments to reduce the taxes collected from the rich and from companies. {3}


In addition, purchasing power is being transferred from the bottom to the top. It has been estimated that 10 percent of the UK population were sinking into direct poverty, any gains in income being overtaken by the increasing cost of living. The next 20 percent were losing out, were being reduced to relative poverty. On the other hand the top 0.4 percent of the population took gains in take-home purchasing power which were 100 times those received by the general population. This was the situation some time ago but it seems to have got worse rather than better. {2}

More or less ignored is the large top-level remuneration which has been increasing yearly for some years at up to four or five times the rate of inflation, increasing each year by amounts many times exceeding the average income of the working population. {1}


So profits are apparently being maximised regardless of the cost to others, to the community. Without care or concern for the condition, standard of living or quality of life of the working population. Without being concerned about the in sum-total enormous human suffering which results. {1}

Overall, what we see are consequences of decisions made at the top, and the results of putting them into effect. Results and consequences which at times make the decisions seem so brutal that they appear inhuman. {1}



CORRUPTED ECONOMICS {1}

Misleading biased interpretations and pronouncements are made in the name of 'economics' which relate to exploiting people at work, as citizens, and in the market place. It appears that misleading and inappropriate terms are used which confuse instead of illuminate, and which seem intended to confuse.


Index-linking is an accepted way of taking the heat out of employer and employee pay bargaining. After index linking, pay bargaining can concentrate on the main issue, namely on how to share out the increased value created by the joint effort of both sides, and on how to adjust national differentials to ensure that no one section gains unfairly at the expense of others and to balance out inequalities.

A ruling establishment could be expected to avoid and resist index-linking of pay because index-linking would limit their efforts to increase profits by lowering the standard of living of the working population.

But what stands out is the way the UK's trade union and Labour party establishments appear to have neglected index-linking for so many years.



MISLEADING EXPERTS {1}

An expert is supposed to advise to the best of his ability, knowledge, skill and experience and is responsible, that is accountable, for the quality of his advice. Responsible, that is accountable, also to those he is advising.

Too often do experts tell people what the expert thinks is good for the people to do. Too often it is the expert who decides or who attempts to compel others to do as told.

Employers have a strong influence on what their employees say in public and employees are likely to be advocating viewpoints which are employer-serving instead of being people-serving and community-serving.


And bias can be increased even further when media present mainly one point of view, say that of employers, or of a particular political party, or of advertisers.



AUTHORITARIAN STRUGGLE TO TAKE OVER AND CONTROL DECISION-TAKING BY TRANSFERRING IT TO LEADERS {4}

The report 'Democracy Under Attack: Top-level Leadership and Decision-taking' {4} discusses and illustrates the internal struggles taking place in companies, political parties and other organisations, for achieving greater democracy and against those wishing to overpower democratic processes of decision-taking.


TOP-LEVEL LEADERSHIP TAKING OVER DECISION-TAKING IN BUSINESS, SERVICE AND COMMUNITY ORGANISATIONS

We are here looking at decision-taking in the management and control of companies, enterprises and all types of community organisations. Looking at the ways in which authoritarian minds attempt to take over and place democratically controlled organisations under authoritarian control.

The confrontation between on the one hand elected policy-making bodies, and on the other hand those who are supposed to put their policies into effect, can be seen in many areas. The abovementioned report {4} shows how the struggle manifests itself under these headings:

Majority Shareholder Taking Over Decision-taking from Other Shareholders

Trade Union General Secretary or Leader of Political Party Changing the Rules to Increase Personal Power

Reorganising the National Health Service: Replacing Grassroots Decision-taking with Top-level Direction and Control of Spending

Controlling the Use of Capital: User-owned User-benefiting Bank Converted to Profit-motivated Shareholder-benefiting Ownership

Senior Executives Taking Over from Owners: Co-operatives

Senior Executives Taking Over from Owners: Companies

Employee Participation in Decision-taking


We can see the struggle in all organisations and at all levels. It is a struggle against authoritarian management or government for the right to take decisions. And in all democratic organisations it is a struggle against the authoritarian mind taking over the decision-taking.

A continuous battle is taking place between on the one hand policy-deciding by the many through elected assemblies, and on the other hand policy-deciding at the top, by a few. This is clearly shown by the way in which full-time officials and executives attempt to take power away from their policy-setting assemblies, after which they attempt to impose their will on the membership or population.


TOP-LEVEL LEADERSHIP TAKING OVER DECISION-TAKING FROM THE POPULATION


Participative Organisation: The Meaning of 'Democracy' <2>

Participative (democratic) organisation {4} rests on the population electing representatives, on the basis of each person having one vote. Representatives are responsible to, and accountable to, the population for putting into effect policies decided by the population.

What underlies participative organisation (democracy) is decision-taking by the people at the level of the people.

And representatives, governments or government officials do not have the authority or right to reduce or sign away the participative (democratic) rights of the electors, of the population.


What needs to be stressed is that in a participative (democratic) organisation policies are decided by a well-informed population at the level of the population and that policies then become binding on management or government. <3>

In an authoritarian organisation the policy decisions are taken at the top or near the top by the hierarchy (establishment) and are binding on the organisation's members. Decision-taking at the top is sometimes referred to as 'deciding centrally'. Authoritarian organisation is the opposite of democracy and underlies dictatorship.

And what we see is conflict between authoritarian minds wishing to dominate, control and exploit on the one hand and, on the other hand, citizens wishing to maintain and improve the standard of living and quality of life for the population as a whole by democratic (grassroots level) decision-taking.

So the real struggle is not between political left and right, but is a struggle for participation (the right to take decisions).


Decision-taking and Policy-setting within Political Party and by Government

We are looking at recent and ongoing events {4} and it is difficult to separate facts from opinions. However, an overall pattern emerges which appears to reinforce and strengthen what is said here about top-level leadership attempting to take over decision-taking from the grassroots population, about the consequent struggle in all organisations and at all levels.


The UKs Labour party's annual conference took binding decisions on policy proposals brought up by grassroots membership. They decided policy which the executive had to follow and put into effect.

Under a new party leadership some fundamental changes were introduced and by 1998 the party's annual conference had ceased to decide policies, had ceased to decide what had to be done. Instead of deciding mandatory policies based on direct policy proposals from local branches, the annual conference became a talking-shop, discussing and expressing views on subjects selected and approved by the leadership.


In September 1998 an opinion poll reported that the majority of people felt that the leader of the Labour government was closer to big business than to ordinary people.


Selecting and Electing Representatives: 'Closed-list' System of Proportional Representation {4}

With this system it is not really the electorate which decides whether one is elected as a local representative. Whether one is elected depends on whether one is placed on the list and on one's top-to-bottom position on the list. So whether one is elected depends on the party leader or leadership.

So one's chance of being elected depends on doing as told by leader or leadership, on supporting their policies, instead of depending on serving one's constituents (local electors), instead of being responsible and accountable to the electors, to the community one is supposed to represent and act for.

The higher up one's name appears on the list, the more likely is one to be elected, the more likely is it that one benefits from the high salary, excellent allowances, good working conditions and good pension rights which go with the job. Loyalty to leader or leadership replaces loyalty to electors.

It is the grassroots membership which should select and decide who is to represent them. The party leadership seems to be close to taking over both functions.

What we see taking place with a closed-list system is far removed from being responsible and accountable to one's local electors, to the local community, for the way in which one represents them and looks after their interests both at local and national level. Democratic decision-taking is reversed by a system of closed-list proportional representation as decision-taking by representatives is replaced with obedience to dictates from the top.


Selecting and Electing Representatives: UK Members of European Parliament (MEPs)

There was widespread criticism from Labour MEPs, the Liberal Democrats and constitutional reform groups when the Labour government proposed to change the selecting and voting for UK MEPs to one which allowed parties rather than the electorate to select who was to be their MEP.

A position near the top of a party list would be crucial to success because seats would be allocated proportionately to the party, not the individual. 'Even moderate MEPs fear the list will be dominated by loyalists' {9}. But
'Labour took the unprecedented step of expelling two of its MEPs last night. ... Both have criticised welfare reform (cuts) and centrally-controlled candidates lists for next year's European elections.' {10}

'The Government (in its European Parliamentary Elections Bill) has insisted on a "closed list" system, allowing voters to choose only a party label, not an individual candidate - leaving the selection of would-be MEPs in the hands of the party bosses. This kind of centralisation breaks one of the cherished features of our democracy, namely the link between elector and elected. Under Labour's proposed system, our representatives will owe their place not to the voters, but to the apparatchiks who granted them a high place on the list.' {11}


TAKE-OVER STRUGGLES

What is surprising is that these attempts to take over and control decision-taking processes appear more one-sided than would be the case if we were looking at unrelated chance events, at unrelated local struggles. What is disturbing is that the pattern seems progressive as if it were planned.

So a continuing process appears to be taking place which seems to be aimed at concentrating decision-taking in the hands of the top-level party leadership.



AGREEMENTS BETWEEN TOP-LEVEL LEADERSHIPS {4}

Also discussed in report 'Democracy Under Attack' {4} is how recently negotiated top-level trading agreements (GATT and the proposed MAI) appear to be taking away the control over key aspects of the internal affairs of participating countries. Taking control away from their elected governments, giving the control to multinational corporations.

But representatives, governments or government officials do not have the authority or right to reduce or sign away the participative (democratic) rights of the electors, of the population.


THE 'GENERAL AGREEMENT ON TARIFFS AND TRADE' (GATT)

GATT is a treaty between many countries in which they agreed that changed and new life-forms can be owned by multinational corporations, generation after generation. {6}

The GATT agreement apparently gives exclusive protection to patent holders for 20 years and imposes strict enforcement criteria. Huge royalty payments will have to be made to multinational corporations. 'Astonishingly, the rules place the onus of proof in case of dispute on the farmers, a provision going against normal rules of justice' {12}. The resulting costs could prevent the vast mass of small farmers from disputing the source of the seeds they are using. {6}

So multinational corporations have been given ownership over new life-forms and the power to force farmers world-wide to pay the multinational each year for seeds even when these seeds were grown by the farmer the previous year. {6}


It appears that GATT serves the interests of multinationals, that is of those who own and control them, at the expense of the economic and social interests and welfare of individual countries, of their people, of their citizens. {6}

And that a situation has been created in which the nature of profit-motivated and profit-orientated multinationals threatens human independence and freedom. {6}


'Ownership' has been defined as 'the right to possess an item of property' and so one has to look closely at where the right comes from and how it is exercised.

Ownership rights are the property of a country's citizens and communities {2}. As far as I know, as said before, no elected representative, government or government employee has the authority to hand over to multinational corporations (that is to those who own and control them), or to anyone else, such ownership rights.

So it would seem that the patent provisions of the GATT agreement are big-business-serving and arbitrary. {2, 6}


THE 'MULTILATERAL AGREEMENT ON INVESTMENT' (MAI)

MAI stands for 'Multilateral Agreement on Investment'. But its name does not reflect those aspects which are of deep concern. What is disturbing are not only the provisions of this proposed treaty but also that the provisions were debated in almost complete secrecy.

It appears that representatives of multinationals and governments representing the 29 richest industrialised countries, all OECD members, had been developing the MAI's provisions at the OECD (Organisation for Economic Co-operation and Development) since 1995. This seems to have been done in complete secrecy till a leaked copy became available on the Internet in 1997.

It seems that the agreement was to have been finalised in February 1998. Apparently it was adverse publicity relating to its restrictive provisions which delayed completion as concerned groups of citizens publicised their concerns. And some governments have now withdrawn their support.


So let us look at the kind of provisions this almost-agreed agreement on 'Multilateral Agreement on Investment' contained {7, 8}:

Democratically elected governments

Would have had to allow multinationals access to the country.

Would have been prevented from discriminating against foreign firms, would not be able to refuse any form of investment in any sector apart from defence.

Would have been prevented from reducing or controlling a multinationals profits, say by minimum-wage or anti-pollution legislation, or by legislation to ensure local employment.

Multinationals would have the right to

Sue national governments for any profits lost through laws which discriminated against the multinational, and which harmed a multinational's interests.

Sue national governments in an international court which would have been closed to public scrutiny.


We saw that multinationals can legally avoid paying corporation tax by transfer pricing {5} and that unitary taxation {3, 5} can overcome this tax avoidance by assessing the actual profits being generated by a multinational in a particular country. Multinationals could, under MAI, have refused to be taxed by a system of unitary taxation.


Socially responsible and caring governmental legislation has to take precedence over the profit-motivated activities of corporations.

But it appears that under MAI the national governments would have handed over control, that is authority to act, over much of the economic and social welfare of their citizens to multinational corporations (that is to those who own and direct these corporations), if they had agreed to this treaty.

In other words, multinationals would have been given overriding authority over democratically elected governments.


Core Findings

It appears that GATT serves the interests of multinationals, that is of those who own and control them, at the expense of the economic and social interests and welfare of individual countries, of their people, of their citizens. {6}

So it would seem that the patent provisions of the GATT agreement are big-business-serving and arbitrary. {2, 6}

And that a situation has been created in which the nature of profit-motivated and profit-orientated multinationals threatens human independence and freedom. {6}


Socially responsible and caring governmental legislation has to take precedence over the profit-motivated activities of corporations.

But it appears that under MAI the national governments would have handed over control, that is authority to act, over much of the economic and social welfare of their citizens to multinational corporations (that is to those who own and direct these corporations), if they had agreed to this treaty.

In other words, multinationals would have been given overriding authority over democratically elected governments.



CONCLUSIONS


SOCIAL SYSTEM

Top-level leadership, directors, are motivated by pay in its various forms, by greater wealth and by greater influence which includes dispensing patronage, and by power. The pay of directors is what owners decide to pay themselves and their directors, and increases with increasing influence and power. Considering mergers and take-overs, we see top-level leaderships battling with each other for more power, for greater control, over people and resources.

So the system is organised so that a few, a relatively very few, people at the top take the key decisions.

We see a pattern of differentials which rewards service to the owners and their establishment rather than ability or service to the community. The pay of directors is what owners decide to pay themselves.

Society and our activities are organised and controlled to enable possessions and wealth to be accumulated by a few people at the expense of the population.

What we see is a system where owners and top-level leaderships enrich themselves by taking or using and risking other people's moneys.


CORRUPTED ECONOMICS AND MISLEADING EXPERTS

Misleading biased interpretations and pronouncements are made in the name of 'economics' which relate to exploiting people at work, as citizens, and in the market place. It appears that misleading and inappropriate terms are used which confuse instead of illuminate, and which seem intended to confuse.


An expert is supposed to advise to the best of his ability, knowledge, skill and experience and is responsible, that is accountable, for the quality of his advice. Responsible, that is accountable, to those he is advising.

But employers have a strong influence on what their employees say in public and employees are likely to be advocating viewpoints which are employer-serving instead of being people-serving and community-serving.

Too often do experts tell people what the expert thinks is good for the people to do. Too often it is the expert who decides or who attempts to compel others to do as told.


COMPANIES, ENTERPRISES

Leaving aside economic theorising about what should be {15}, and looking only at what is actually taking place, we see that companies and enterprises are the means for exploiting not just the employees but the community and society as a whole for the benefit of only a few people at or near the top.

The source of profit (surplus) is money collected from customers, is money which belonged to customers.

Owners take the profits but have transferred much of their own risk to other people.

Without giving customers a choice, companies (owners) also simply take their customers' moneys

for getting back money already spent on the business and

for expanding the business without giving the community corresponding ownership rights.

Even co-operatives and mutual aid societies (building societies, credit unions) have been retaining some of their members' profits each year, for no apparent valid reason, accumulating these moneys for over 150 years <4>. By continually adding these moneys to their reserves they have become rich and powerful. Their chief executives and directors have become powerful, influential, and well paid.


Ownership laws which assign ownership 'rights' to owners have been devised by the owners themselves or by those who serve them.

No banker, no financial institution, no shareholder would dream of giving away their capital without making sure of retaining ownership and control over this money, through the transfer of corresponding securities and ownership rights, and of direct and indirect participation in the resulting profits.


But all the abovementioned moneys are being taken legally from customers who are the owners of these moneys by the owners of corporations. They are taken by corporations (their owners) without in return giving corresponding ownership rights to their customers or the community.


Ownership of land and means of production, of funds and wealth, has always been accumulated at someone else's expense. All belonged to the community, belonged to all alike.


Company pension funds in the UK run into many GBP billions and between them own, and thus are in position to influence and control, much if not most of UK's equities. Including company credit unions and providers of private pensions, such moneys and funds represent the working population's savings.

Instead of being under the control of those who contributed, these moneys are in effect placed under the control of a few people at the top who in this way gain power and influence, are enabled to dispense patronage (and support each other), gain high incomes and much wealth.


ROLE OF GOVERNMENT

Government serves business enterprises (companies, owners) by

Transferring taxpayers' moneys to enterprises.

Condoning tax avoidance by enterprises (making good the loss by collecting more taxes from the population).

Using taxpayers' moneys to pay operating costs of enterprises.

It serves business enterprises and the rich by

Condoning tax avoidance by the rich.

Taxing the working population more severely.

So we see taxpayers' moneys being used in different ways to enlarge the profits of companies and thus of their owners, and to make the rich even richer.

Vast amounts are handed over yearly in such ways and increase the wealth and power of a small number of people without any corresponding return to the community. They are generally given without a corresponding transfer of ownership rights and control to those who provided the money, to the community.


PROFIT (EXPLOITATION) MAXIMISING

In practice directors are generally required by owner-serving laws to act first and foremost in the interests of the owners, so that it is profit which is maximised. Short-term and long-term profits can be and are being maximised.

Profits are then maximised regardless of the cost and consequences to the community, limited only by the likelihood of unpleasant consequences such as restraining fines, punitive legal punishment or adverse publicity.

Profit margins and prices need to be controlled effectively so as to protect the community from exploitation. But they are not.


Owners and employers use inflation as an excuse for reducing real wages and salaries of the working population so as to increase profits.

And employees do not receive their share of the increasing national income and wealth. UK pensions, for example, would now have to be increased by 34 percent just to reach the level at which they should be.


Apparently owners and employers will, when they can, pressurise the working population into accepting even lower rates of pay by increasing the working population's needs. Doing so by advocating greater unemployment, reducing social security, reducing national health service provisions, weakening the quality of education (knowledge, clear thinking, understanding, objective evaluation).


Moneys saved by government by spending less on social security for those in need and moneys gained by collecting more tax from the working population, are apparently being used by owner-serving governments to reduce the taxes collected from the rich and from companies.


In addition, purchasing power is being transferred from the bottom to the top. It has been estimated that 10 percent of the UK population were sinking into direct poverty, any gains in income being overtaken by the increasing cost of living. The next 20 percent were losing out, were being reduced to relative poverty.

On the other hand the top 0.4 percent of the population took gains in take-home purchasing power which were 100 times those received by the general population. The large top-level remuneration has been increasing yearly for some years at up to four or five times the rate of inflation, increasing each year by amounts many times exceeding the average income of the working population.


So profits are apparently being maximised regardless of the cost to others, to the community. Without care or concern for the condition, standard of living or quality of life of the working population. Without being concerned about the enormous human suffering which results.

Overall, what we see are consequences of decisions made at the top, and the results of putting them into effect. Results and consequences which at times make the decisions seem so brutal that they appear inhuman.


AUTHORITARIAN STRUGGLE TO TAKE OVER AND CONTROL DECISION-TAKING BY TRANSFERRING IT TO LEADERS

Authoritarian minds attempt to take over and place democratically controlled organisations under authoritarian control. They do so by struggling to take over the decision-taking in the management and control of companies, enterprises and all types of community organisations.

The confrontation between on the one hand elected policy-making bodies, and on the other hand those who are supposed to put their policies into effect, can be seen in many areas.

We can see the struggle in all organisations and at all levels. It is a struggle against authoritarian management or government for the right to take decisions. And in all democratic organisations it is a struggle against the authoritarian mind taking over the decision-taking.

A continuous battle is taking place between on the one hand policy-deciding by the many through elected assemblies, and on the other hand policy-deciding at the top, by a few. This is clearly shown by the way in which full-time officials and executives attempt to take power away from their policy-setting assemblies, after which they attempt to impose their will on the membership or population.


The government's important role of keeping the system in operation and of transferring such vast funds from the working population to leaderships, explains the intense struggle going on within political parties for control of decision-taking (policy-setting), with authoritarian minds attempting to concentrate decision-taking in the hands of the top-level party leadership.


These attempts to take over and control decision-taking processes are far more one-sided than would be the case if we were looking at unrelated chance events, at unrelated local struggles. At times the pattern seems progressive as if it were planned.


AGREEMENTS BETWEEN TOP-LEVEL LEADERSHIPS

Recently negotiated top-level trading agreements (GATT and the proposed MAI) appear to be taking away the control over key aspects of the internal affairs of participating countries. Taking control away from their elected governments, giving the control to multinational corporations.

But representatives, governments or government officials do not have the authority or right to reduce or sign away the participative (democratic) rights of the electors, of the population.

No elected representative, government or government employee has the authority

  1. to hand over to corporations (that is to those who own and control them), or to anyone else, an overriding control over the present and future, economic and social, welfare of the people, or

  2. to sign away democratic rights of their people for the self-determination of key fundamental aspects of their lives.


It appears that the 'General Agreement on Tariffs and Trade' (GATT) serves the interests of multinationals, that is of those who own and control them, at the expense of the economic and social interests and welfare of individual countries, of their people, of their citizens.

And it would seem that the patent provisions of the GATT agreement are big-business-serving and arbitrary.


MAI stands for 'Multilateral Agreement on Investment'. But its name does not reflect those aspects which are of deep concern.

What is disturbing are not only the provisions of this proposed treaty but also that the provisions were debated in complete secrecy till a leaked copy became available on the Internet in 1997. Apparently it was adverse publicity relating to its restrictive provisions which delayed completion as concerned groups of citizens publicised their concerns. And some governments have now withdrawn their support.

It appears that under MAI the national governments would have handed over control, that is authority to act, over much of the economic and social welfare of their citizens to multinational corporations (that is to those who own and direct these corporations), if they had agreed to this treaty.

In other words, multinationals would have been given overriding authority over democratically elected governments.


Socially responsible and caring governmental legislation has to take precedence over the profit-motivated activities of corporations.


SECRECY AND PUBLICITY

We saw that the MAI's provisions were discussed in complete secrecy and that it was adverse publicity relating to its restrictive provisions which delayed completion of the MAI as concerned groups of citizens publicised their concerns. We also saw that consequently some governments withdrew support.

A company can serve as a front behind which those who take key decisions can hide, as a front for owners and directors.

And the most effective control of corporate irresponsibility appears to be the fear of bad publicity, of public awareness of socially irresponsible company behaviour, of consequent impact on sales and market share.

Particularly so when publicity names those responsible for making antisocial decisions within the company, and those responsible for condoning, or for omitting to restrain, the company's antisocial activities.


OVERALL

So profits are apparently being maximised regardless of the cost to others, to the community. Without care or concern for the condition, standard of living or quality of life of the working population. Without being concerned about the enormous human suffering which results.

What we see are consequences of decisions made at the top, and the results of putting them into effect. Results and consequences which at times make the decisions seem so brutal that they appear inhuman.


Attempts to take over and control decision-taking processes are far more one-sided and widespread than would be the case if we were looking at unrelated chance events, at unrelated local struggles. At times the pattern seems progressive as if it were planned.


We can see struggle in all organisations and at all levels. It is a struggle against authoritarian management or government for the right to take decisions. And in all democratic organisations it is a struggle against the authoritarian mind taking over the decision-taking.



NOTES AND REFERENCES


NOTES

<1>     Note that what is said in this report mostly applies equally well to companies, corporations, businesses or enterprises. Within the context of this report these terms are usually interchangeable although companies (corporations) are registered (incorporated), their owners then benefiting from limited liability.
     
<2>   Extracted from {4} which discusses the meaning of democracy, and its necessary requirements, in more detail.
     
<3>   See also {16} for a more comprehensive discussion of the electing, appointing and appraisal of managers, directors and elected representatives, the right to know, the right to be heard, and of work, pay and differentials.
     
<4>   Since I discovered this and published my findings {16} there have been isolated instances of co-operatives moving towards giving their members a better deal.
     
<5>   Costs + Profit = Price
     
    'Mark-up' is 'Profit' expressed as a percentage of 'Costs'
     
    Say Costs = 100
Profit = 10
       
    Then Price = 100+10=110
       
    And Mark-up = (10/100)*100 = 10 percent
       
    'Costs' include wages and salaries


REFERENCES

{ 1} Corrupted Economics and Misguiding Experts
Manfred Davidmann
http://www.solhaam.org/

{ 2} Understanding How Society is Organised for Controlling and Exploiting People
Manfred Davidmann
http://www.solhaam.org/

{ 3} Taxing the Population for Private Profit
Manfred Davidmann
http://www.solhaam.org/

{ 4} Democracy Under Attack: Top-level Leadership and Decision-taking
Manfred Davidmann
http://www.solhaam.org/

{ 5} Transfer Pricing and Taxation
Manfred Davidmann
http://www.solhaam.org/

{ 6} Creating, Patenting and Marketing of New Forms of Life
Manfred Davidmann
http://www.solhaam.org/

{ 7} Globalisers run into the buffers
Larry Elliott and Charlotte Denny
Guardian, 24/03/98

{ 8} Move to revive world pact
Larry Elliott
Guardian, 10/09/98

{ 9} Labour MEPs face cull; Row looms over Blairite poll lists
Michael White
Guardian, 27/12/97

{10} Labour expels rebel MEPs
Stephen Bates
Guardian, 09/01/98

{11} Editorial
Guardian, 20/11/98

{12} Seeds of discontent
Walter Schwarz
Guardian, 11/03/94

{13} Motivation Summary
Manfred Davidmann
http://www.solhaam.org/

{14} The Will to Work: What People Struggle to Achieve
Manfred Davidmann
http://www.solhaam.org/

{15} Community Economics: Principles
Manfred Davidmann
http://www.solhaam.org/

{16} Co-operatives and Co-operation: Causes of Failure, Guidelines for Success
Manfred Davidmann
http://www.solhaam.org/



Relevant Current and Associated Works

     
Title   Description
     
     
Component Reports
     
Corrupted Economics and Misleading Experts   Shows how 'Economics' is used to misinform and mislead the general public. Clearly states underlying considerations of specific important economic relationships and comments on misleading political interpretations and on role of independent experts.
     
Taxing the Population for Private Profit   Shows how taxpayers' moneys are used in different ways to enlarge the profits of companies (corporations). These are in effect allowed to tax the population and to pass large parts of their operating costs to taxpayers and so to competitors.
     
Democracy Under Attack: Top-level Leadership and Decision-taking   Discusses and illustrates the internal struggles taking place in political parties and all other organisations, for achieving greater democracy and against those wishing to overpower democratic processes of decision-taking.
     
Understanding How Society is Organised for Controlling and Exploiting People   Describes how corporations (companies) accumulate their capital and reserves from moneys taken from customers. Enterprises are allowed to collect, take over and control such moneys. Cooperatives also take over moneys from their members. And much more.
     
     
Other relevant current and associated reports by Manfred Davidmann
     
Style of Management and Leadership     Major review and analysis of the style of management and its effect on management effectiveness, decision taking and standard of living. Measures of style of management and government. Overcoming problems of size. Management effectiveness can be increased by 20-30 percent.
     
Role of Managers Under Different Styles of Management     Short summary of the role of managers under authoritarian and participative styles of management. Also covers decision making and the basic characteristics of each style.
     
Directing and Managing Change     How to plan ahead, find best strategies, decide and implement, agree targets and objectives, monitor and control progress, evaluate performance, carry out appraisal and target-setting interviews. Describes proved, practical and effective techniques.
     
Motivation Summary   Reviews and summarises past work in Motivation. Provides a clear definition of 'motivation', of the factors which motivate and of what people are striving to achieve.
     
The Will to Work: What People Struggle to Achieve   Major review, analysis and report about motivation and motivating. Covers remuneration and job satisfaction as well as the factors which motivate. Develops a clear definition of 'motivation'. Lists what people are striving and struggling to achieve, and progress made, in corporations, communities, countries.
     
Work and Pay   Major review and analysis of work and pay in relation to employer, employee and community. Provides the underlying knowledge and understanding for scientific determination and prediction of rates of pay, remuneration and differentials, of National Remuneration Scales and of the National Remuneration Pattern of pay and differentials.
     
Work and Pay: Summary   Concise summary review of whole subject of work and pay, in clear language. Covers pay, incomes and differentials and the interests and requirements of owners and employers, of the individual and his family, and of the community.
     
Exporting and Importing of Employment and Unemployment   Discusses exporting and importing of employment and unemployment, underlying principles, effect of trade, how to reduce unemployment, social costs of unemployment, community objectives, support for enterprises, socially irresponsible enterprise behaviour.
     
Transfer Pricing and Taxation   One of the most controversial operations of multinationals, transfer pricing, is clearly described and defined. An easily-followed illustration shows how transfer pricing can be used by multinationals to maximise their profits by tax avoidance and by obtaining tax rebates. Also discussed is the effect of transfer pricing on the tax burden carried by other tax payers.
     
Inflation, Balance of Payments and Currency Exchange Rates     Reviews the relationships, how inflation affects currency exchange rates and trade, the effect of changing interest rates on share prices and pensions. Discusses multinational operations such as transfer pricing, inflation's burdens and worldwide inequality.
     
Organising   Comprehensive review. Outstanding is the section on functional relationships. Shows how to improve co-ordination, teamwork and co-operation. Discusses the role and responsibilities of managers in different circumstances.
     
Social Responsibility, Profits and Social Accountability   Incidents, disasters and catastrophes are here put together as individual case studies and reviewed as a whole. We are facing a sequence of events which are increasing in frequency, severity and extent. There are sections about what can be done about this, on community aims and community leadership, on the world-wide struggle for social accountability.
     
Social Responsibility and Accountability: Summary   Outlines basic causes of socially irresponsible behaviour and ways of solving the problem. Statement of aims. Public demonstrations and protests as essential survival mechanisms. Whistle-blowing. Worldwide struggle to achieve social accountability.
     
Co-operatives and Co-operation: Causes of Failure, Guidelines for Success   Based on eight studies of co-operatives and mutual societies, the report's conclusions and recommendations cover fundamental and practical problems of co-ops and mutual societies, of members, of direction, of management and control. There are extensive sections on Style of Management, decision-taking, management motivation and performance, on General Management principles and their application in practice.
     
How the Human Brain Developed and How the Human Mind Works   Describes clearly what happens while sleeping, role of dreaming, meaning of dreams. Functioning of the two halves of the human brain is related to the autonomic nervous and the immune systems. Shows how human behaviour is affected by primitive instincts.
     
Using Words to Communicate Effectively   Shows how to communicate more effectively, covering aspects of thinking, writing, speaking and listening as well as formal and informal communications. Consists of guidelines found useful by university students and practising middle and senior managers.
     
Community and Public Ownership   This report objectively evaluates community ownership and reviews the reasons both for nationalising and for privatising. Performance, control and accountability of community-owned enterprises and industries are discussed. Points made are illustrated by a number of striking case-studies.
     
Ownership and Limited Liability   Discusses different types of enterprises and the extent to which owners are responsible for repaying the debts of their enterprise. Also discussed are disadvantages, difficulties and abuses associated with the system of Limited Liability, and their implications for customers, suppliers and employees.
     
Ownership and Deciding Policy: Companies, Shareholders, Directors and Community   A short statement which describes the system by which a company's majority shareholders decide policy and control the company.
     
Creating, Patenting and Marketing of New Forms of Life     Evaluates problems in genetic manipulation, and consequences of private ownership of new life-forms by multinationals. Lists conclusions and recommendations about man-made forms of life, their ownership and patenting, about improving the trend of events.
     
The Right to Strike   Discusses and defines the right to strike, the extent to which people can strike and what this implies. Also discussed are aspects of current problems such as part-time work and home working, Works Councils, uses and misuses of linking pay to a cost-of-living index, participation in decision-taking, upward redistribution of income and wealth.
     
Reorganising the National Health Service:
An Evaluation of the Griffiths Report
  1984 report which has become a classic study of the application and effect of General Management principles and of ignoring them.

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Relevant Subject Index Pages and Site Overview


The Site Overview page has links to all individual Subject Index Pages which between them list the works by Manfred Davidmann which are available on the Internet, with short descriptions and links for downloading.

To see the Site Overview page, click Overview

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Copyright    ©    1998    Manfred Davidmann
All rights reserved worldwide.

History
20/12/98 Completed
07/02/99 To Website
02/06/02 Added 'Relevant Current and Associated Works'