Background 12.10.2018

“Deception, Fraud, Lies”

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Thilo Bode denounces the power of corporations, who in his opinion control politics. He sees a failing democracy and is counting on public resistance. Bode, now 71 years old, has never been one to shy away from a fight. He served as the executive director of Greenpeace before founding the consumer organisation foodwatch in 2002. The economist from Eching am Ammersee is Germany’s best-known activist. If you accuse him of populism, he responds with a gentle smile.

Spiegel: Mr Bode, in your new book, you claim that the political system is no longer fit for purpose, that representative democracy is failing and that global corporations have seized power.[1] How did you arrive at this bold assertion?

Bode: I often use the case of climate change to illustrate my point. Thirty years ago, the energy companies themselves recognised the problem and even pointed out the associated dangers. In 1988 there was a hearing before the U.S. Senate. NASA scientist James Hansen testified that climate change is already happening. The oil and energy companies responded by beginning to systematically sow the seeds of doubt. They paid off researchers and published studies that talked the issue to death. Were it not for this resistance, the problems would have never reached their current magnitude. The governments failed to effectively intervene.

Spiegel: Practically no one except Donald Trump denies climate change, and policymakers, for example in Germany, have long since started to implement the appropriate measures.

Bode: That doesn’t improve matters. In spite of the certainty that climate change is man-made, the climate agreements have become weaker, from Kyoto to Paris, where only voluntary agreements were made. The fact that our climate will continue to change has been accepted. The only aim now is to limit the damage.

Spiegel: But is this the result of corporate power or consumer apathy?

Bode: Shirking responsibility is a strategy used by corporations. There’s no question that consumers are also partly responsible. However, the policies of corporations are based on deception, fraud and lies. The energy giants have lied to the public about climate change. The banks are lying to policymakers when they say that increasing the capital requirements for financial intermediaries would bring the financial services industry to the brink of collapse. Food companies are well aware of the harmful effects of sugar consumption and nevertheless flood emerging economies with products that are causing an epidemic of diabetes and obesity. And the digital companies are deliberately using social networks to remove an important monitoring mechanism of democracy: namely you, the media. It’s cynical to say that the consumers themselves are to blame.

Spiegel: Are you not underestimating citizens by implying that they’re unable to take responsibility for themselves?

Bode: My criticism is more fundamental. Health, climate, democracy and the stability of the financial system are public goods and, accordingly, must be safeguarded through public decisions. However, this is no longer happening. Why not? On the one hand, companies have become larger, wealthier and more powerful and are able to buy practically anything and anyone. This trend has intensified since the end of the political competition between capitalism and communism in the late 1980s. However, there has been no comparable increase in power at the government and regulatory level.

Spiegel: Are corporations really more powerful than in the past? IBM once controlled the market for mainframe computers, Microsoft was the leading operating systems vendor, and AT&T dominated the telephone market. All of these companies have largely lost their power.

Bode: That may be true, but on the whole, corporations today are much more powerful than in the past. Market concentration has increased in practically all sectors. For example, three companies control 60% of the market for agrochemicals and seeds, and Google holds more than 80% of the total market share for mobile operating systems. A further aspect is the increased financial power. Corporate profits have skyrocketed in the developed world.

Spiegel: And you believe that corporations are systematically abusing this power?

Bode: The new superstar companies are buying up their competitors. They’re buying law firms who can file lawsuits against governments. They’re making sure that provisions on investment courts, from which only they can profit, are added to trade agreements. They’re engaging in systematic tax avoidance and evasion. They’re buying universities and scientists. When has a company ever funded 20 new professorships in one fell swoop, as was recently done by the Schwarz Group?

Spiegel: The Rockefellers did things like that in the past. That’s how the American system of elite universities was created: through the private foundations of wealthy individuals and companies. And super companies have existed since as far back as the early 20th century, companies that controlled entire countries and continents, like United Fruit. Their power also broke down in the end. But you don’t seem to have any faith in competition.

Bode: Market forces will not solve the problems I’m describing. Nevertheless, I’m a supporter of the social market economy. It would be nonsense to call for a change of system. Instead, we must return to the core principles of the social market economy that is worthy of this name.

Spiegel: For example?

Bode: Above all, corporations must be held liable for the damages caused by their business models. Before Monsanto was taken over by Bayer, the competition authorities investigated whether the merger would reduce the price competition for hundreds of individual product markets, but they didn’t consider the big picture. The supply structure and political power of corporations should also be a subject of competition policy.

Spiegel: The Bayer/Monsanto case could also be seen as proof that the monitoring mechanisms still work. The takeover was only approved subject to strict conditions. Furthermore, a court recently awarded a significant sum in damages to someone who may have been harmed by exposure to glyphosate (see page 65). Bayer’s reputation was hurt, and the company’s stock price fell dramatically.

Bode: Those are only superficial corrections. The market is becoming increasingly concentrated. All agricultural conglomerates follow the same model of agriculture. It establishes product standards and methods that are disastrous in terms of food security and ecological health. Monsanto has also tried to play down and cover up the dangers of the weedkiller Roundup. Regardless of what the antitrust authorities do to counter them, it won’t be anywhere near enough.

Spiegel: The health effects of glyphosate are debatable. There are studies that have linked the substance to cancer, and others that dispute these findings.

Bode: That’s not the point. The attendees of the 1992 Earth Summit in Rio agreed on a few basic principles. One of the most important of these was the precautionary principle, which says that, if there’s any scientific uncertainty regarding the potentially grave risks associated with a product or innovation, it should be steered clear of. Climate change is the most striking example of to what extent humanity has failed to observe the precautionary principle. Glyphosate is another. From the perspective of the corporations, it makes sense to ignore the precautionary principle, because precaution privatises the losses. Dealing with the damage after it has occurred means, in this case, that we all pay for the climate crisis. Actually, the corporations should have to apologise and admit that they have sinned against society.

Spiegel: The corporations will say that they had primarily acted in the interests of their shareholders.

Bode: You’re right about that. Executives are paid for implementing a business model that harms society while benefiting shareholders. What’s not OK is that the public is being deceived about the harmful consequences. This situation is crying out for government regulation. However, it won’t change as long as political and corporate interests are converging due to the revolving door phenomenon.

Spiegel: What do you mean by the revolving door phenomenon?

Bode: The number of congressional representatives in the U.S. who accept jobs as lobbyists at the end of their political careers has risen from 8% in the 1980s to around 50%. This percentage is even higher among EU Commissioners. There’s also traffic in the other direction, as corporate leaders are moving into key political positions. In Germany Jörg Kukies, former co-CEO of Goldman Sachs, has been appointed State Secretary in the Federal Ministry of Finance. Do you think this will help improve financial market regulation? I don’t. There’s a convergence of interests between the political and business elites that runs counter to the common good.

Spiegel: So you assume that practically all scientists and politicians can be bought? That sounds like a conspiracy theory.

Bode: No, that’s an oversimplification. It’s not that mafia-style corporations are working with totally corrupt governments. The issue is that politicians have an interest in getting and keeping power. This is why they’ll do anything to avoid falling out with society. Corporations have an interest in being able to do whatever they want. They offer lucrative positions to politicians who let them do what they want. In other words, there’s a kind of partnership of convenience. The automotive industry is an excellent example.

Spiegel: And yet politicians are elected not by corporations, but by citizens.

Bode: The right to vote still formally exists. But it no longer has enough influence to effectively determine the course of governmental action. The massive influence of the corporations is drowning out the voice of the people. Democracy is becoming a shell.

Spiegel: So what you’re saying is that the uninformed citizens don’t see what’s actually happening, and the policymakers are acting against the interests of their voters so that the corporations will allow them to be in power.

Bode: You put it quite trenchantly. But that’s not what I’m describing. Globalisation has increased the power of corporations. The states are competing for these corporations. On the other side, the regulatory power of the states hasn’t increased at a comparable rate. The European Single Market is driven by corporate interests. You’d be hard-pressed to find democracy, human rights or consumer rights there.

Spiegel: Both Google and Microsoft have been heavily fined by the EU. A case against Amazon is pending. In other words, corporations are being cracked down on.

Bode: Cases like that are about violations of competition law. These companies are able to pay the multi-billion-euro fines from petty cash. The fines are peanuts compared to the taxes they avoid paying. What matters is that the digital corporations are using clicks and algorithms to determine which news, which truths and untruths are being disseminated. This is a threat to democracy. And antitrust laws can’t bring this situation under control.

Spiegel: You’re only describing one side. The other is that social media sites are important platforms for many democratic movements worldwide. Because they allow for a counter-public sphere away from state propaganda. It’s the users, not politics that have made Facebook and Google so big.

Bode: The Internet is a fantastic invention. But now these corporations are abusing the power that the users have given them.

Spiegel: What are the consequences?

Bode: If people have the feeling that their voices are not being heard in the democratic process, then the populists advance and democracy comes under threat.

Spiegel: Are politicians like Donald Trump and the rise of the autocrats a response to what you’re describing?

Bode: That’s difficult to say. However, what I’m observing is a growing frustration among people. There are plenty of things that could be dealt with right away, like the precarious employment conditions of workers employed by digital corporations. Action could be taken against tax avoidance. Apple is now worth a trillion dollars and nevertheless pays hardly any tax. At the same time, many people can’t even afford rent. That’s unacceptable. If this continues, society is doomed.

Spiegel: And you’re on your hobby horse again. One could say that in your book you’re also serving populism, even with your choice of title Diktatur der Konzerne (“Dictatorship of the Corporations”).

Bode: I disagree. What I’m trying to do is draw attention to the problem. We need fundamental changes in all areas of society. In the judicial system, corporations should be “subjects” of international law. They must be held liable for violations of human rights law. In addition, we urgently need a law of corporate criminal liability so that instead of having to prove that a Mr Winterkorn personally ordered the use of “defeat device” software at Volkswagen, the company itself can be held liable under civil and criminal law.

Spiegel: There’s a law of corporate criminal liability in the U.S. Do they have “better” corporations because of this?

Bode: Not better corporations, but more effective penalties for unlawful acts and therefore strong deterrence. It’s anachronistic how the corporate lobbies say that companies are unable to commit wrongful acts. Of course they are. Just look at Volkswagen.

Spiegel: How will reforms like these ever be possible if, as you say, the corporations are calling the shots?

Bode: It can only happen if the people fight back. All major changes have come from the people. The free-trade agreement TTIP was averted thanks to protests. The environmental movement wasn’t started by politicians. It’s also not about a lean or broad government administration. We need active citizens and a strong government.

Spiegel: What would that look like?

Bode: I don’t want to present any blueprints of solutions. Instead, my intention is to first create an awareness of the problem. I hope this will lead to a new discussion of how we imagine democracy. But it’s our only hope. Otherwise, the 21st century could go down in history as the era in which corporate rule displaced democracy.

Spiegel: Mr Bode, thank you for this discussion.

[1] Thilo Bode: Die Diktatur der Konzerne – Wie globale Unternehmen uns schaden und die Demokratie zerstören. S. Fischer; 240 pages; €18. Release date: 22 August 2018.