Corporate Rule

The inequalities of wealth between rich and poor countries are not just facts of life — they are the result of capitalist imperialism. First came the slave trade, the unimaginable violence of which left deep and permanent scars on the economies and societies of all the countries it touched, including by permanently impeding development in sub-Saharan Africa. Then came colonialism, which rested on the exploitation of colonial populations and the extraction of resources to the benefit of the colonizers and the detriment of the colonized. The violence and racism upon which colonialism was based continues to scar many countries to this day.

Alongside slavery and colonialism came economic imperialism. Rich countries, which industrialized before poor countries, have prevented poor countries from catching up, leaving them in a position of permanent underdevelopment. The rich world enclosed and protected their own economies until powerful multinational corporations emerged that were easily able to beat international competition. These countries then enforced free-trade policies when doing so was convenient to the interests of these corporations and maintained protectionism when it was not.

Massive multinational corporations have, under the guardianship of powerful Western states, treated the world economy as their playground for decades now. They easily outcompeted smaller firms in the poor world, using their market power to gouge their suppliers, forcing them to cut costs by reducing wages and worsening working conditions. They have exploited unequal power relations to buy up land and natural resources in poor states on the cheap. They have also offshored production to poor countries, taking advantage of low labor costs and reshoring the profits to their home nations.

In order to seamlessly move their money around the world, these companies have made use of a financial system dominated by Western banks that, with the backing of Western governments, facilitates tax avoidance and evasion — not to mention fraud and money laundering — on a grand scale. But while money is free to move wherever it likes, people are not. Capitalist states cement inequality by preventing people from moving around to find better-paid jobs. They also maintain their dominance by preventing states in the Global South from accessing resources and technology that would help them to industrialize.

And if any government ever attempts to challenge this grossly unfair international system, rich countries have created the legal architecture that prevents them from doing so. When Texaco spilled oil all over the Ecuadorian rainforest, severely impacting the health of those living in the area for years to come, a group of Ecuadorian citizens took the company to court in an attempt to force it to clean up the spill. Upon hearing the verdict, Chevron — the new owners of Texaco — fled the country with all their assets and immediately launched legal action against the government of Ecuador.

The company made use of a secretive, parallel legal system that allows corporations to sue governments if they implement legislation that harms their profits. So-called investor-state dispute settlements (ISDSs) are litigated in “corporate courts” created by Western nations and forced on the rest of the world through unfair trade deals. The tobacco company Philip Morris, for example, tried to sue the Australian government when it introduced plain packaging on cigarettes. The government won in this case, but most of the time poor countries lose — as Ecuador did in its case against Chevron. Chevron was able to avoid responsibility for clearing up after itself; and it clawed back millions of dollars in legal costs from the developing nation.

There can be no doubt that climate breakdown will have a disproportionate impact on the Global South. It is also clear that the Global South will lack the resources to respond to climate threats effectively because of the deep biases toward rich countries that exist in the international system — biases that are ruthlessly policed by rich countries themselves. All of this sounds very deeply unfair, but can it really be described as “apartheid”?

Containing Democracy

In South Africa, the system of apartheid was based on the division of society into four main racial groups: white, black, coloured, and Indian. Apartheid — which literally means “apartness” in Afrikaans — involved the imposition of strict rules on the interactions between members of each of these groups, including bans on interracial marriage and the relocation of black South Africans to “townships” or “locations” to enforce their separateness. Access to social infrastructure — from public toilets to beaches — was restricted on the basis of race.

This system was overseen by an authoritarian government composed of white politicians. The franchise was restricted to whites, and the rules were rigidly enforced by a brutal police force. Ultimately, the apartheid government sought to relocate black South Africans to Bantustans (separate homelands) to enforce apartness through national borders.

The system lasted from 1948 until 1994, when it was dismantled thanks to decades of struggle. Anti-apartheid activists, led by the African National Congress (ANC), engaged in demonstrations, civil disobedience, and strikes and were met with astonishing violence from the police. This violence culminated in massacres: in the 1960 Sharpeville Massacre, sixty-nine people were killed by the South African police for protesting against the country’s pass laws; in the 1976 Soweto Uprising hundreds of schoolchildren were murdered for protesting the imposition of Afrikaans in schools.

Despite calling for international condemnation and sanctions, South African anti-apartheid activists could count on very limited international support. Most countries condemned South African apartheid, but many Western governments continued to cooperate with the apartheid regime and pushed back against calls for sanctions. South Africa was both the source of critical natural resources — extracted by grossly exploited black workers — and an ally in the fight against communism.

In the United States in the 1980s, Ronald Reagan sought to deepen ties with South Africa. He consistently opposed sanctions against the apartheid regime, violated a UN arms embargo on South Africa, and approved a billion-dollar IMF loan to the country. Reagan described the ANC as a “terrorist organization,” and Nelson Mandela was considered a terrorist by the US government until as recently as 2008.

While condemning the apartheid regime, the UK also retained close links with South Africa throughout the apartheid period. South Africa was a critical source of natural resources like gold, and UK firms were a significant presence in the country, profiting from the exploitation of black workers. During the early years of apartheid, the UK led the resistance to calls for international sanctions — and the UK continued to refuse to support a full program of sanctions until the 1990s.

The UK government also refused to interact with the ANC until 1986, believing that the institution was part of the communist threat against the free world. In 1987, Margaret Thatcher described the ANC as a “typical terrorist organization.” Thatcher was concerned that any rapprochement with the ANC could have implications for her position “regarding contact with the IRA [the Irish Republican Army].”

In short, Western states like the United States and the UK did not help — and sometimes actively hindered — the fight against apartheid in South Africa. Only once it became clear that apartheid was no longer sustainable, and once the communist threat had been neutralized, did Western leaders begin to support the full imposition of sanctions and attempt to facilitate a negotiated end to apartheid.

The reasons for this support went beyond considerations of economic self-interest and political strategy. As Quinn Slobodian points out in his book Globalists: The End of Empire and the Birth of Neoliberalism, many prominent thinkers within the neoliberal movement — the movement to which politicians like Thatcher and Reagan were aligned — were active supporters of South African apartheid. The reasons for their support hinged on the way apartheid protected against “economic populism.”

A central tenet of the neoliberal movement was that the world had to be protected from unfettered democracy. The uncivilized and uneducated masses couldn’t be trusted with the vote, as they had not been disciplined into sufficient respect for “the market.” If popular movements were able to wield the levers of economic power, they would introduce “populist” economic policies like nationalization, free health care, and stronger rights for workers. The idea was, as Slobodian puts it, that “democracy might have to be restricted for certain peoples in order to preserve stability and prosperity.”

The apartheid system was a crucial protection against the threat of economic populism. But this threat remained present at the level of the world economy. So the neoliberals developed a project to “encase” democracy all over the world. They set about creating a vast array of international rules and norms designed to prevent the emergence of true economic democracy and consolidate the power of rich countries over poor ones — rules that continue to facilitate the dominance of the poor world by the rich world to this day.

The Rules-Based Order

South African apartheid was, as we have seen, unique. But apartheid itself, unfortunately, is not.

The Israeli state has been accused by multiple states, human rights groups, and international organizations of overseeing a system of apartheid in the occupied territories — a system so grossly unjust that it has required inhuman levels of violence to enforce. The ANC government in South Africa — the same ANC that led the fight against apartheid in South Africa — has condemned Israeli apartheid. Nelson Mandela once remarked that “our freedom is incomplete without the freedom of the Palestinians.”

Accusations of apartheid have been made against many states that use their legal and police power to subjugate certain groups. These systems — whether or not they are formally classified as apartheid — tend to have several things in common. Such systems aim to keep subjugated groups separate from dominant ones, concentrate ownership of resources among dominant groups, and allow dominant groups to maintain a stranglehold over political power.

The first point is the enforcement of separateness. Rich countries have spent decades constructing ever more elaborate legal and violent mechanisms — from President Joe Biden’s shutdowns of the US-Mexico border limiting crossings by asylum seekers to the European Union’s unofficial detention camps — to prevent people from poor countries from entering the rich world. Rishi Sunak’s plan to deport those seeking refuge in the UK to Rwanda was merely one of the most extreme examples of such a trend. It is quite clear that, as climate breakdown forces more people out of their homes, these efforts to police the separation of rich and poor will escalate.

The most obvious physical representation of this attempt to enforce separateness is the astonishing growth in the number of border walls around the world, which increased from twelve at the end of the Cold War to seventy-four in 2022. In Europe, there are now 1,800 kilometers of walls and fences built or under construction at the bloc’s borders — equivalent to twelve Berlin Walls.

Right-wing zealots like Marine Le Pen have shifted from a position of climate denialism to claiming that migrants “don’t care about the environment” because “they have no homeland.” Across Western democracies, the growing cross-party consensus on demonizing refugees, combined with a refusal to stem the root causes of their displacement, is only likely to strengthen the far right’s anti-migrant rhetoric.

The second point is the unequal ownership of resources. We have already seen how the world’s largest multinational corporations and financial institutions are headquartered in the Global North and profit from a system of imperialism that keeps poor countries in a position of underdevelopment. But the issue of unequal ownership is even more acute when it comes to climate breakdown.

The world’s largest private fossil fuel companies are headquartered in the Global North and make massive profits for Western investors. These companies have made a total of $281 billion worth of profit since Russia’s invasion of Ukraine, according to Global Witness. BP, Shell, Chevron, ExxonMobil, and Total made record profits in 2022 thanks to the increase in global energy prices by extracting fossil fuels at low costs — often from poor countries — and selling them to consumers at inflated prices. Many of these companies also receive huge subsidies from Western governments.

However, many of the largest fossil fuel extractors are not private Western companies but state-owned energy companies like Saudi Arabia’s Aramco or China’s National Petroleum Corporation. The West has long turned a blind eye to Saudi Arabia’s brutal authoritarian Islamist regime (which has also been accused of “gender apartheid”), selling the country weapons in exchange for access to its plentiful oil reserves. In the wake of the devastating Iraq War, the United States pushed for the privatization of Iraqi oil, allowing Western multinationals to enter the country and exploit its resources.

Other large fossil fuel producers, like Russia and China, are not Western allies — but their unaccountable rulers are still able to benefit from the system of climate apartheid constructed by the West. The Russian war machine, for example, is funded by natural gas revenues, and the emissions caused by the conflict are, according to one think tank, equivalent to the annual emissions of a country like Belgium. While elites extract wealth and power from their country’s natural resources, ordinary people receive few benefits and are instead forced to bear the costs of war and climate breakdown.

Finally, there’s the issue of political power. We have already seen how the “liberal rules-based international system” is weighted in favor of multinational corporations and states in the Global North. The legal underpinnings of this system are linked to the neoliberal project to encase democracy and undermine the threat of economic populism. But these inequalities are even more significant when it comes to climate breakdown.

Mia Mottley, the prime minister of Barbados, has argued that the current international system is preventing poor countries from mitigating the impacts of climate breakdown. These countries face higher borrowing costs, which means they are forced to spend more money to invest in decarbonization and climate change mitigation, despite having smaller economies. In fact, poor countries already face what one minister from Saint Vincent and the Grenadines called a “Sophie’s choice” between sustainable development and rebuilding from the ravages of natural hazards. Mottley describes this system as “the injustice of the post-independence world.”

Mottley, alongside many other academics, campaigners, and policymakers in the Global South, has called for debt cancellation for poor countries, alongside a reform to the Bretton Woods institutions to facilitate greater flows of capital to the poor world to facilitate decarbonization and climate change mitigation. The Bridgetown Initiative argues for an increase in lending to poor countries through the IMF and multilateral development banks, the transformation of the governance of international financial institutions to make them more equitable and inclusive, and the creation of an international trade system that supports green transformation.

But world leaders have failed to heed these calls. Mottley castigated the world leaders assembled at COP26, noting that their “failure to provide enough critical funding to small island nations is measured in lives and livelihoods in our communities.” These failures were, she argued, “immoral and . . . unjust.” Absent a fundamental transformation in the rules governing international trade and investment, poor countries will be left alone to deal with the impact of climate breakdown — a crisis they did not cause.