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Repeated Corporate Scandals, Crashes May Signify New Era of Capitalism
BY MARCO PROCACCINI - Enron, Tyco, Global Crossing, Thus, Xerox, ImClone, Adelphia. And now WorldCom. Corporate corruption, executive rip-offs and white collar crime resulting in looted companies and ten of billions of dollars in lost investment-much of it hard earned pension and other retirement savings of working people of modest means.
And many observers claim this trend will continue. "What we're seeing are the vestiges of an earlier era - an era of 'the end justifies the means,"' Charles Elson, director of the US based Center for Corporate Governance told the Associated Press. "It's an infection that's working its way out of the system. But it will take a while. Until it's gone, we'll see others."
Ken McGee, of the research firm Gartner Incorporated, confirmed this dire prediction. "We're just now paying for the period of irrational exuberance. I'm afraid it's not over yet," he said.
However, other observers are seeing a much deeper cause of the problem. Paul Foot, international business critic for the Manchester Guardian newspaper, says the bigger and more powerful capitalist corporations become, the more WorldCom type scandals and destruction we can expect.
Furthermore, he argues that the very fundamentals of capitalist economic policies, many which have remained unquestioned by most business circles, need to be reviewed, and that the corruption within large corporations is not isolated from other conditions created by capitalist policies.
"(Many capitalist critics argue) if only the rotten apples could be rooted out of the capitalist barrels, the full glory of the fruit could be properly appreciated," Foot said. "The problem with this argument is that it overlooks the central feature of capitalism: the division of the human race into those who profit from human endeavour and those who don't. This division demands freedom for employers, and discipline for workers; high pay and perks for bosses, low pay for the masses; riches for the few, poverty for the many."
Most observers admit that corruption, greed and other anti-social behaviour among the senior bureaucracies of capitalist corporations are a tacitly accepted part of the existence of such institutions and economics. But many have become concerned with what appears to be an unusual wave of high-profile scandals directly resulting in such wide spread destruction.
While the majority of the corporations affected are US-based, senior bosses at several major British firms, especially Tyco (short for Tycoon) and Thus, are under scrutiny for tax evasion and misleading shareholders.
The impact of these scandals is being felt across the globe, especially by employee pension funds, which unfortunately are often the biggest casualties of capitalist mismanagement.
"This should serve as a wake-up call to workers about the need to create accountability in how pension plans are managed," said Gil Yaron, of the Shareholder Association for Research and Education, a newly formed organization that trains elected union trustees how to manage pension plans or hold other plan management firms accountable.
He says there is a pressing need to democratize the control and management of large pools of capital, such as pension and other funds. This is especially true in the all too frequent case where pension managers are also the senior executives of corporations where the same pension money is invested.
"There are often conflicts or perceived conflicts between the interests of the managers and their responsibility to the plan members," Yaron said. "Their first priority is their fiduciary responsibility to the pension plans and their shareholders. This is something they seem to forget too often."
The Columbia Journal
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