The Landless Tenant: Economic Autonomy and Public Authority

After this past week’s class, where we discussed economic autonomy and global business, I wanted to delve a little further into the role that international organizations play in providing global businesses economic autonomy and in some cases, authority. I know I’ve looked at this before, but I think I’m going in another direction, so bear with me.

Specifically, I’m thinking of the IMF and its use of conditionality regarding the loan packages it offers. I think most readers will know what it is, but if not, here’s a brief run-down. Conditionality in IMF loans are the demands the IMF makes upon the recipient in order to receive, and continue to receive, IMF funds. Typically, these conditions include market liberalization, lowering or removing tariffs and quotas, and the sale or privatization of state-owned industries. In principle, these ideas make sense because if these systems were working, the country in question would have no need for these loans. The international community is assisting a fellow country adapt to better succeed in the international realm and presumably provide a better quality of life to its citizens by improved economic and financial processes.

But who is able to immediately take advantage of these new opportunities? In almost all cases, it is large, international investment firms and multinational corporations. While their money may provide some lift, most of the profits are likely not remaining in the new market, being spent at local grocery stores or other retail outlets, being used to invest in new businesses tailored to the host country, or any of the host of ways that successful local businesses support their communities, because the investors do not reside in the country where this money is being made. By and large, it is enabling foreigners to profit from the work of the locals while not providing the full benefit a locally established business might. It also enabling these foreign entities to lobby and apply pressure to the host government to continue to provide favorable conditions to these foreign investors, possibly to the detriment of building a sustainable group of local businesses. Their vast wealth, facilitated and enabled in part by the international organization community, provides them with an economic autonomy that the loan recipient itself does not possess.

As we looked at in an earlier reading (Abrahamsen and Williams), these corporations are also, in certain cases, able to acquire and provide their own security, more or less independent from the host state, and in many cases they provide better security to their area of interest and pay a better wage. With the ability to provide economic and physical security, are these entities now landless sovereigns, able to utilize their economic autonomy to move from place to place as needed? What happens when, inevitably, this tenant sovereign no longer finds the landholding is needed or able to provide sufficient economic value and simply moves on?

To me, at least in this scenario, the international community is enabling the destruction of the very thing that it claims to stand for: the importance and inviolability of the sovereign state.