CSR is irresponsible

Corporate social responsibility - it seems impossible to be against it: who wants companies to be irresponsible towards society? But words are deceptive. The premise behind CSR - that the profit motive is tainted, global capitalism is leading the world to rack and ruin, and business has a duty to give something back to society - is fundamentally flawed. And so too is the practice of it.

I spoke about this theme at a very stimulating seminar last week, which underscored how far the pernicious logic of CSR has won over businesspeople, politicians and anti-corporate campaigners alike.

Anyone in Europe or North America who doubts whether global capitalism can benefit the public good should look around at the material plenty that surrounds us. We are not just wealthier than ever before, we are healthier and better educated too.

Of course, profits and social welfare are not always synonymous. For profit-seeking to maximise social welfare, markets must be competitive and prices need to reflect true social costs and benefits. It is easy to think of cases where this is not so: for instance, a factory that spews out pollution without regard for its neighbours. But then the issue is: what is the best way to curb that pollution? I believe that legislation enacted by elected parliaments is infinitely superior to CSR. 

What, though, are we to make of companies' individual CSR projects? Are they good, bad or indifferent? The two key tests are: do they improve a company's long-term profitability? And do they advance the broader public good?

Consider corporate giving. Many businesspeople see charitable donations as a kind of feel-good advertising, or a way of improving a poor public image. Fair enough, but unless those benefits exceed the cost of the donation, it is damaging to profits. So what? - you may say - it is all in a good cause. Not so fast. Managers do not own companies, shareholders do. While managers may wish to earn kudos, or feel good about themselves, by making corporate donations to charity, generosity with other people’s money is not philanthropy, it is theft.   

CSR may also impose costs on companies that are partly hidden and hard to measure, so that even though a company thinks its CSR policy is profit-enhancing, it may in fact be a drag on profits. For instance, CSR can divert managers' energy and attention from the company's core business, discourage potentially profitable risk-taking behaviour, and allow managers to disguise poor performance at achieving the single bottom line through emphasis on the inherently subjective and incommensurate "triple bottom line".

Unsurprisingly, businessmen tend to see all CSR as win-win; while anti-corporate campaigners often believe that win-win activities are mere window-dressing and that CSR is only effective if companies sacrifice profits in the pursuit of greater social welfare. They both neglect, of course, the possibility that CSR could actually harm social welfare. 

Even window-dressing and tokenism have a financial cost – and if they produce no benefit at all, they reduce social welfare. Worse, CSR is often used as a pretext to restrict competition, and in an international context as a form of backdoor protectionism: expensive CSR commitments act as a barrier to entry for smaller firms, or those from developing countries. 

While it may be rational for companies to enact CSR policies if they are the lesser of two evils - if the cost of not doing so is greater than the cost of doing so - this does not mean that CSR is socially desirable. It may make business sense for a shopkeeper to pay off the Mafia if they threaten otherwise to burn down his store, but this does not make a protection racket socially beneficial. Likewise, it may make business sense for Tesco to give in to the demands of pressure groups who want it to do business in a more environmentally friendly way, because of the costs to its reputation if it doesn’t, but that doesn’t imply that the NGOs’ criticisms are correct, or that society is better off thanks to NGOs’ successful blackmail of Tesco.   

The most pernicious kind of CSR is the more ambitious kind: the efforts to impose higher global labour and environmental standards around the world. Although it is probably a win-win for rich-country multinationals operating in poor countries to offer higher-than-average wages and working conditions – as indeed they do – because they want to attract the best workers, trying to enforce too high a standard, or pulling out of developing countries altogether, costs poor people their jobs and thus an opportunity to improve their lives.

Of course, there are many examples of abuse and exploitation, but it is not true that developing countries' lower labour and environmental standards are by definition a bad thing. They are a consequence, not a cause, of poverty and it is only through companies making products in developing countries and selling them on the global market - thereby raising living standards - that those standards are going to rise. Capitulating to NGOs' wrong-headed demands may be rational, profit-seeking behaviour for multinationals - but it harms the poor people it purports to help.

The bigger problem with CSR is that it is undemocratic. The UN's Global Compact, for instance, talks about spreading "good practices" based on "universal principles". But who decides what those good practices and universal principles are? Ask people what the world’s problems are and you will get a variety of opinions. Ask them what the solutions are, and how we might achieve them, and you get an even wider range of answers. If everyone agreed on the solution to the world’s problems, there would be no need for politics. We could just appoint administrators and let them get on with the job. But in fact, people disagree on just about everything. That is why we have elections, governments and political debate. It is a messy, rough-and-ready way of deciding society’s priorities, but it is less bad than all the alternatives - not least CSR.   

Companies’ social responsibility is to make profits, not decide how, or how much, the environment should be protected. It is a duty that they have to their shareholders who have entrusted their savings to them. Workers’ jobs depend on it. So does a country’s prosperity: scarce resources should only be tied up in a company if it is adding value. Profit is not a dirty word. Profits help pay for schools, hospitals and pensions. 

Certainly, people have aims besides getting richer. They care about how the pie is shared out, as well as its size. They also care about how the pie is produced: whether corporate activity damages the environment or compromises workers’ safety and dignity. These plural aims do not always conflict: companies with happy workers are often profitable, and vice-versa. But sometimes they do. That is where there is a role for governments: to draft and enforce laws that express society’s collective view about how, say, the balance between economic growth and environmental protection should be struck.   

This traditional model of governance has many advantages. The lines of responsibility are clear: governments set the rules of the game, companies then aim to make profits subject to those constraints. This is not only democratic. It is also fair: laws are transparent, apply equally to all companies, and are impartially enforced by the courts. And it is flexible: laws can vary according to local conditions and preferences. The best way to help workers and the environment is generally through national laws drafted on the basis of democratic participation and consultation.

Governments are more than capable, either individually or collectively, of achieving social aims through legislation. And if there is an appropriate framework of laws that ensures effective competition and corrects market failures, maximising profits is not just good for a company’s shareholders, it is in society’s best interests too. So companies are not irresponsible if they maximise profits within the framework of the law; it is society that is irresponsible if it seeks to pursue (often misguided) social and environmental aims through CSR.

Do corporations rule?

Dear Philippe

Do corporations rule the world? No doubt about that.

Who prevented the US from signing the Kyoto Accord despite massive evidence that global warming is a fact? The US corporate lobby, of course.

Whose interests are served by the World Trade Organization (WTO), the most powerful multilateral organisation ever created? Transnational corporations (TNCs).

Financial crises have become more and more frequent since the 1980s, prompting calls for an effective global financial architecture with strong capital controls to prevent the destabilizing herd like moves of speculative capital.

Any move in this direction, however, has been squelched by the corporate lobby: the tiniest speed-bumps to the destabilising, lightning-speed movements of finance capital are non-existent, even as prominent Wall Streeter Robert Rubin, a partisan of non-regulation, predicts that "future financial crises are almost surely inevitable and could be even more severe."

Indeed, all efforts to regulate the operations of TNCs have failed, the most notorious instance being the way the United Nations Center for Transnational Corporations (UNTC), a body set up to monitor and regulate corporate abuse, was dismantled under TNC pressure and converted instead into an office to promote foreign investment.

The spectacular scandals involving Enron, Arthur Andersen, WorldCom, and many others could only take place in the atmosphere of feverish deregulation and extremely lax government controls that eroded the firewalls between management and board, auditor and audited, stock analyst and stock broker, commercial banking and investment banking.

While some heads have rolled, this is a case of ritual punishment since many TNCs continue to be marked by the same corrupt, non-transparent practices, with reform stymied by a powerful corporate lobby to which both the Democratic and Republican parties are beholden.

With the Bush administration, corporate rule is at its peak. This is an administration that has aggressively sought to reverse 35 years of environmental legislation and open up protected areas to exploitation by Big Oil and Big Energy.

This is an administration that, owing to the opposition expressed by US banks, killed a modest move to create a Chapter 11-type mechanism to allow developing countries undergoing financial crisis to declare bankruptcy and reorganise their affairs.

This is an administration that brazenly went to war partly to benefit its cronies in Big Oil and unashamedly awarded other corporate cronies like Halliburton with massively profitable war contracts.

This is an administration that is undertaking the most radical experiment in privatisation in occupied Iraq - the creation of a free-market legal order that would render that country completely permeable to foreign investors.

Perhaps the arrogance and corruption of unfettered power is best exemplified by Big Pharma. It is one of the biggest beneficiaries of the draconian global patent law, the Trade Related Intellectual Property Rights Agreement (TRIPs). TRIPS legalises the TNC's monopoly over key advanced technologies and allows them to privatize knowledge developed in a cooperative fashion by human communities over the centuries

Big Pharma has spent the last decade trying to suppress attempts by developing country governments to loosen patent rights and thus deliver affordable antiretroviral drugs to millions of HIV-AIDS afflicted patients.

Big Pharma is tremendously flush. It makes a 20 per cent return on investment, making it the most profitable industry in the US. And it can do this by making not only anti-retrovirals expensive on the market but other drugs too, including many of vital interest to sick people in developed countries like the United States. The World Health Organization (WHO) estimates that most patented medicines retail at 20 to 100 times their cost of manufacture!

But Big Pharma says, hey, we need monopoly profits to support research and development (R&D). Really? Big Pharma is no longer that interested in doing R&D in diseases that afflict many of the world's peoples.

Even though tropical diseases were the main killers of the world's peoples, only 13 of 1233 new drugs that reached the market between 1975 and 1997 were approved specifically for tropical diseases. Poor people have little market power, which explains why so much of the resources of Big Pharma is currently devoted to producing and improving chemical toys like Viagra, for which there is immense demand from the rich and the middle classes.

Dear Walden

Big companies are rich and powerful - no doubt about that - but do they run the world? Certainly not.

The biggest constraint on corporate power comes from competition. A huge company like Vodafone is only successful because consumers choose to buy its products: if you don't like their service, you can switch to Orange or another mobile-phone company.

If Vodafone fails to keep its customers happy, it will eventually go bust or get bought up. That's what happened to Midland Bank, once the world's largest, and now owned by HSBC; or British Leyland, once the world's third-biggest carmaker, which eventually became the now-defunct Rover Group.

Of course, competition is not a cure-all. Some companies gain an unhealthy monopoly. Others are able to fix prices. Companies may exploit their workers or pollute too much, and so on. So governments often need to regulate companies - and they do.

Undeniably, corporate lobbying sometimes has an undue influence on government regulation: the TRIPS agreement that you have singled out for criticism is a good example. But despite all their flaws, it is simply not true that governments always, or mostly, do the bidding of big businesses.

Companies are just one of many powerful lobbies: farmers, trade unions and pressure groups also have a big say. They all compete to influence government decisions and secure support from voters for their positions.

Take Kyoto. Yes, corporate lobbying played a part in the US' refusal to sign it - but so did the widespread belief among American voters that it was against US interests. If companies rule supreme, how come European governments signed up to Kyoto?

The WTO is a good example of governments seeking to overcome corporate power. Even though the benefits of free trade far outweigh the costs, governments often find it hard to lower trade barriers. Companies that fear foreign competitors tend to lobby governments harder than the disparate millions of consumers who benefit from cheaper imports.

The WTO helps to break this deadlock. Governments offer to open domestic markets in exchange for greater access to foreign ones. This galvanises exporters' support for liberalisation, which helps to overcome the opposition of import-competing industries. The economy as a whole benefits as a result.

There are plenty of examples of governments acting to curb, rather than advance, corporate interests. In 2001 the European Commission stopped the world's biggest company, General Electric, from buying Honeywell. It has also fined Microsoft for abusing its monopoly on computer operating systems.

Governments regulate companies' behaviour in all sorts of ways. Companies have to pay their employees a minimum wage, provide a healthy and safe work environment, and not discriminate against women or minorities.

They generally have to recognise unions and give some notice and compensation to workers they want to fire. They have to comply with environmental standards on everything from how much they can pollute to how much they must recycle.

Food and drugs have to be shown to be safe. Consumer-protection law sets out standards for advertising as well as customers' right to refunds. Product-liability laws make companies accountable for any harm their products may cause. A whole of host of industries, such as water, electricity, telecoms, banking and broadcasting, are even more tightly regulated.

Since the Labour Party came to power in 1997, the British Government has raised taxes on business and imposed many new regulations such as the minimum wage. If companies ran the world, surely they would have prevented this happening?

And where governments fear to tread, lawyers do not. In America, Big Tobacco has paid out over $150bn after successive class-action suits and a court has just ordered the giant pharmaceutical company Merck to pay $253m in compensation to a woman for the harm that its Vioxx drug did to her. So much for Big Pharma's "unfettered power".

Dear Philippe

The successful class action suits against Big Tobacco or the Vioxx settlement that you mention do not contradict the fact that corporations are the most powerful institutions of our time.

At the very least, governments are expected to protect the life and limb of citizens. Merck and the cigarette companies endangered public health and safety in brazenly criminal ways. The state would itself have lost legitimacy had it not acted.

But, in fact, rather than serve as a demonstration of corporate weakness, the two cases illustrate corporate power. Given the inescapable link between cancer, heart disease, and other ailments and cigarette smoking, cigarettes should have been a severely controlled hazardous substance by now. Instead, cigarette promotion continues unabated, bringing continued profits to King Tobacco.

And let's face it: the Vioxx settlement of $253 million is a slap on the wrist of an immensely profitable corporation, considering that a report by the US Food and Drug Administration concluded that the arthritic painkiller might have contributed to an estimated 27,785 heart attacks or deaths since it hit the market in 1999.

If these figures ultimately prove true, Merck's officers should be criminally prosecuted and jailed for wilful negligence, criminal misrepresentation, conspiracy, and multiple manslaughter.

The fact of the matter is that the regulatory framework in the US that was constructed between 1930 and 1970 to provide some protection for workers, consumers, the environment, and small businesses has been drastically eroded by corporate pressure over the past two-and-a-half decades.

The Glass Steagall Act preventing commercial banks from engaging in the sale of securities was first subverted by the Federal Reserve Bank, which allowed commercial banks to set up investment houses, then repealed in 1999 amid great joy on Wall Street.

Owing to anti-competitive practices, a district court judge ordered Microsoft broken in two in 1999, but this was reversed by the Bush Department of Justice in 2002, which allowed Microsoft to walk away with not even a fine and with what amounted to just a warning that government would be looking over its shoulder.

With such reluctance to enforce anti-trust laws on the part of Washington, is it any wonder that collusive and monopolistic practices would proliferate over the past two decades, involving not only hustlers like Enron and WorldCom but scores of blue chip titans, such as Citigroup, Times Warner, and Merrill Lynch?

As for the rights of workers, two-and-a-half decades of union-busting by government, a spew of right-to-work laws, runaway shops, and uncontrolled outsourcing has reduced the size of organised labour in the US from 25% in the early seventies to at most 13% today.

And today's labour movement in Britain is a ghost of what it was before Margaret Thatcher's union-busting, pro-corporate regime. Now if we talk about the erosion of corporate regulation in the North, in the developing world we are talking about no effective regulation at all.

Governments dare not enforce environmental and occupational safety laws nor press for decent wages and safeguard union rights for fear that foreign investors will simply pack up and leave for corporate nirvana: China.

You say that the biggest constraint on corporations is the market. Tell that to millions of Americans who have been made so desperate by sky-high prices for essential drugs set in classic oligopolistic fashion by Big Pharma that they have resorted to crossing the Canadian border to get the same products at a fraction of the price.

Tell that to motor vehicle buyers around the world whose choice has been whittled down to the same range of obsolete fossil-fuel contraptions churned out by about 14 conglomerates in 2004, down from about 30 significant independent producers two decades ago.

Governments dare not enforce environmental and occupational safety laws nor press for decent wages and safeguard union rights.

And while we're on the subject of climate change, was the signing of the Kyoto Protocol by the European Union a sign of corporate weakness, as you imply? Hardly.

As we all know, the targets for emission reduction are dangerously low given the scale of the problem. European corporations knew they could hit the targets with minimal impact on their profits, and this slight cost was more than offset by the gain in public relations.

Their contrasting responses to Kyoto show that European corporations are probably smarter than the Americans, but not that they are any less powerful.

Corporate power is out of control. It needs to be tamed. And that will have to be done, not by the market but by the combined action of governments and global civil society.

Dear Walden

Governments, not companies, are the most powerful institutions of our time.

Even the biggest companies have to compete to attract capital and workers that are free to move elsewhere: they have to persuade potential shareholders and lenders to give them funding and convince people to come work for them and stay working for them.

They also have to continue persuading customers to buy enough of what they produce at a high enough price to earn sufficient profits to pay shareholders and workers an acceptable return. If they fail to do so, they will go bust or get taken over.

Governments, on the other hand, can impose taxes and regulations on people and companies. General Motors, America's biggest carmaker, has to abide by local fuel-efficiency and product-safety standards wherever it wants to sell cars.

Exxon, America's biggest oil company, pays taxes even in tiny Luxembourg. If Exxon developed an oil field in Algeria, the Algerian government could tax it, or even nationalise it. Even tin pot states can arrest or conscript their citizens and fight wars.

All of Wall Street's combined financial clout could do nothing to avenge the destruction of the World Trade Centre; but the American government could. A handful of states can blow up the earth. And unfortunately, even states that fail to deliver the basics for their citizens - like food and security, let alone prosperity and freedom - rarely disappear.

The only "companies" that have powers remotely comparable to those of states are the drug cartels. Colombia's earn billions of dollars a year, control parts of the country, have private armies and operate outside the law.

You argue that tobacco and pharmaceutical companies are not tightly regulated. But this is nonsense. Tobacco companies must comply with ever-more stringent regulations such as ever-bigger health warnings and an advertising ban in Europe, while smokers are increasingly banned from lighting up in public places.

As for the Vioxx settlement, the $253m payout is doubtless only the first of many claims that Merck will face.

In fact, many would argue that governments regulate too much, not too little. Smokers complain about the punitively high price of cigarettes and the restrictions on where they can indulge their habit.

Patients awaiting new life-saving drugs grumble at the long and costly delays that onerous government safety tests impose; the overwhelming majority of Vioxx users who have benefited from the drug without harmful side-effects bemoan its withdrawal from use.

More broadly, many blame high unemployment in France and Germany on the red tape that ties up companies in knots. And the high price that Americans pay for medicines is in large part due to government-granted patents that give companies the exclusive right to sell the drugs they develop for 20 years.

Whether you think that governments regulate too much or too little, there is no doubt that they are capable of regulating companies - and thus that companies do not enjoy the unfettered power that you claim.

You conclude that: "Corporate power needs to be tamed. And that will have to be done, not by the market but by the combined action of governments and global civil society." If, by your own admission, governments can still tame companies, then companies are clearly not the most powerful beasts in the jungle.

Walden Bello is professor of sociology at the University of the Philippines. He is the author of 15 books, including the recently published Dilemmas of Domination: the Unmaking of the American Empire (New York: Henry Holt, and Co., 2005). He was the recipient of the Right Livelihood Award (also known as the Alternative Nobel Prize) in 2003 for his work on globalisation.

Philippe Legrain writes about globalisation and European issues. He was previously special adviser to the then Director-General of the World Trade Organisation, Mike Moore. Before that, he was trade and economics correspondent for The Economist.

Sorry, but we just don't need the global compact

Globalisation is not perfect, but it is overwhelmingly a force for good. The rapid growth of trade and investment across national borders is spreading greater prosperity and opening up new opportunities to billions of people around the globe. China has recorded the fastest fall in poverty the world has ever seen. Global inequality is now declining for the first time since the Industrial Revolution, as China, India and others begin to catch up with the West. Those countries that are still floundering  notably in Africa  are largely victims not of globalisation, but of a lack of it.

Yet economic globalisation poses important challenges for a political order that remains anchored around nation states. States have unique powers to tax and regulate, as well as the unrivalled legitimacy that national allegiance and democratic accountability confer. Unfortunately, though, some states are incapable of enforcing their own laws, let alone providing the good governance and sound policies required for sustained economic development.

Some critics go further. They claim that globalisation is stripping governments everywhere of their powers. Huge global companies increasingly rule the roost, exploiting the poor and the environment for their own profitability, with little or no restraint. To stave off a devastating "race to the bottom" of labour and environmental standards, the global clout of multinational companies must be co-opted to achieve what critics believe to be desirable social change. In short, global companies must be compelled to be "socially responsible".

pressure groups pushing pet schemes, consultants peddling money-spinning advice, companies seeking to protect their profits from attacks on their reputation, and international organisations keen to be seen to be doing good. One of the many corporate social responsibility (CSR) schemes is the United Nations' Global Compact, a voluntary charter whose signatories pledge to uphold nine broad principles of human rights, labour standards and environmental protection throughout the world.

Hong Kong show.

Even where governments can't  or won't  regulate appropriately, companies (especially foreign ones) are ill-suited to setting and enforcing social norms. Companies' social responsibility is to make profits within the constraints of the law, not to decide how, or how much, the environment should be protected. And people generally prefer domestic misrule  even by autocrats  to foreign intervention, however well-meaning.

The UN Global Compact, according to a seemingly innocuous statement on its website, "utilises the power of transparency and dialogue to identify and disseminate good practices based on universal principles". But who decides what those "good practices" and "universal principles" are? If everyone agreed on the solution to the world's problems, there would be no need for politics. But in fact, people disagree on just about everything.

It is not only undemocratic for self-interested foreign companies blackmailed by self-selected anti-capitalist campaigners to be setting social standards in developing countries. It is also inefficient and unfair. There is no single right way to regulate: preferences and circumstances differ. Moreover, relying on a small group of big foreign companies to enforce rules ensures that any efforts will be patchy and limited. Global CSR not only has echoes of imperialism. It can also harm the people it purports to help if, for instance, imposing too costly environmental standards causes workers to lose their jobs.

The world needs more globalisation and better government. It does not need more CSR.

Business doesn't rule

Progressive politics ought to be about hope: that we can create a fairer society where everyone can make the most of their potential. Yet the prevailing mood on the left is despair. Globalisation, many believe, is leading the world to rack and ruin - and there is little we can do about it. American-led corporate power is elbowing aside government and trampling on democracy.

Critics such as Naomi Klein, Noreena Hertz and George Monbiot claim that companies run the world. Their brands are colonising our minds. Their sheer size gives them clout. Their financial muscle bends elected representatives to their will. Their freedom to shift factories from country to country disempowers workers. The governments we elect connive in this, either because they are in the pockets of big business or because their power has leached away. So our votes are useless. In place of democracy, we face a grim choice between apathetic acquiescence and doubtless futile resistance.

This is dangerous claptrap. Start with brands. If they are so powerful, why couldn't Coca-Cola convince us to drink New Coke? Why does own-label cereal outsell Kellogg's? The grip of Nike shoes hardly compares with that of patriotism or love. Although some susceptible people, mainly poor kids, may unfortunately be gulled into spending money they can ill afford, this hardly means brands are conquering the world.

Brands are actually signs of corporate weakness, not strength. It is only because fickle consumers have so much choice that companies try to woo them with their branding. Monopolists needn't bother. Moreover, companies that are trying to sell an image or a reputation are incredibly vulnerable to anything that is perceived to damage them. Remember how Shell caved in to a handful of Greenpeace activists over the disposal of the Brent Spar oil platform? As companies increasingly make a virtue of being "socially responsible" - of being good to their employees, the environment and the community, rather than mere money-making machines - their vulnerability can only increase. Thus, brands, far from being vehicles for corporate global domination, give people unprecedented sway over companies' behaviour.

Corporate power is much exaggerated. Take the oft-repeated "fact" that 51 of the 100 biggest economies are corporations. It is arrived at by comparing companies' sales and countries' gross domestic product (GDP). But this double-counting inflates companies' importance, since one company's inputs are another's sales. A less misleading comparison - between companies' value-added, the difference between their sales and the cost of their inputs, and countries' value-added, their GDP - reveals that only two companies make it into the top 50 value-added creators. The biggest, Wal-Mart, an American supermarket chain that owns Asda, created value-added of $68bn (£43bn) in 2000, around the same as Chile's GDP - and less than a 20th of Britain's. Together, the 50 largest countries are 22 times bigger than the top 50 corporations.

In any case, inferring from companies' size that they are as powerful as countries is fatuous. Whereas companies have to attract workers and capital that are free to go elsewhere, countries can impose taxes and regulations: mighty Exxon Mobil pays taxes even in tiny Luxembourg. Supposedly footloose companies cannot, in fact, easily escape governments' writ: they are tied to places in many ways - by their customers, a skilled workforce or the good roads, schools and hospitals that our taxes pay for. Even if companies became more mobile, governments could collude to nab them, by cooperating over tax raising, for instance.

Companies that fail to persuade customers to buy enough for them to earn sufficient profits to pay shareholders and workers an acceptable return go bust or get taken over, whereas even failed states rarely disappear. The only "companies" with powers remotely comparable to those of states are the drug cartels: Colombia's earn billions of dollars a year, control parts of the country, have private armies and operate outside the law.

Wal-Mart seems puny in comparison. Indeed, because it faces fierce competition from other retailers, it has less scope to mark up its prices than the only shop in an isolated skiing village. Competition can constrain even the biggest companies - one reason why globalisation is such a good thing. Closed domestic markets, where national champions can cosy up to government, are much more likely to be monopolised than open global ones. So even though global companies are bigger than before, they are not necessarily more powerful. It is the absence of competition, not size, that gives companies clout.

If companies were taking over the world, you'd expect them to be grabbing a bigger slice of the economic pie. They exist, after all, to make profits. Yet from a recent cyclical peak of 12.6% of GDP in 1997, US corporate profits fell to 11% in 2000 and 9.3% in 2001 - in line with the average over the past 50 years of 10.5%. The figures for Britain show a similar trend.

Of course, companies sometimes have an undue influence on governments. So money and politics should be kept as separate as possible and government conducted more openly. Yet business has a right to lobby governments, just as trade unions, environmental groups and individuals do. This does not imply that governments are companies' lackeys.

Governments can - and do - tame the corporate leviathans. The European Commission stopped giant General Electric from buying Honeywell. The US government nearly broke up Microsoft, which is still being prosecuted by US states and investigated by the European Commission. Business has to abide by a battery of legislation on workers' rights, product liability, health and safety, environmental protection and much else. Where governments fear to tread, lawyers do not: each year people start almost 2 million lawsuits against American companies, which pay out damages of around $150bn a year. Last but not least, taxes on company profits have steadily risen as a share of rich OECD countries' GDP: from 2.2% in 1965 to 3.3% in 1999. If businessmen are running the show, they must be masochists.

The truth is companies are not running the show. We are still free to determine our future - as individuals, as groups of like-minded people and through the power of our elected governments. If people really wanted to, they could reverse globalisation - as they did in the 1930s, with catastrophic consequences. All it takes is enough votes for the Greens, Socialist Alliance or BNP.

Globalisation is a choice, not an imposition. Progressives should embrace it because it makes us richer - in the broadest sense - and allows governments to spend more on schools, hospitals and helping the underprivileged. It does not imply that Britain has to become like America: Sweden's economy is far more open than Britain's, yet its welfare state is second to none. Globalisation comes with several options: we can to a large extent pick and choose what kind of globalisation we want. Don't burn your Nikes: politics is not dead.