SUPER BRANDS- THEIR IMPLICATIONS FOR WORK, INDIVIDUALS …

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPY RIGHT © 2013 Institute of Interdisciplinary Business Research 400

DECEMBER 2013

VOL 5, NO 8

SUPER BRANDS- THEIR IMPLICATIONS FOR WORK, INDIVIDUALS AND ORGANISATIONS, AND THE ROLE THE EMERGENCE OF GLOBALISATION

AND THE NEOLIBERAL POLICY HAVE PLAYED IN THIS

Tasnim Bibi Kazi

Academic Lecturer of Regent Business School, South Africa

Vartikka Indermun

Academic Lecturer of Management College of Southern Africa (MANCOSA)

Prof Mohamed Saheed Bayat

Academic Dean- Management College of Southern Africa and

Adjunct Professor University of Fort Hare

Abstract

The rise of the superbrands has had many implications on the nature of work, and on workers and organisations. This paper has three broad parts. The first part explores the dynamics of the superbrand, Nike, and the implications of Nike as a superbrand. The second part discusses globalisation and the third part talks about the neoliberal policy. When discussing globalization and neoliberalism, the purpose is to show how they have facilitated and supported the rise of the superbrand and their multinational corporations (MNCs). There will be no direct links made; rather the aim is to illustrate how their central tenets and principles are self-evident and obvious in showing how globalisation and neoliberalism have been instrumental in contributing to the emergence and growth of super brands like Nike and their MNCs.

Keywords: Super brands, globalisation, neoliberalism, labour, profit.

INTRODUCTION

Brands, or superbrands like Nike, have been described as one of the central

mediums of globalisation and as symbols of a global economy. These brands have

constantly appeared on the top half of all studies of the most powerful and the

„greatest‟ brands, with Nike in 2012 having a brand value of $15, 9 billion. Forbes in

2012 ranked Nike as the world‟s most valuable sports brand. Klein (2000) describes

Nike as a transcendent superbrand, as it took branding to another level, beginning to

focus principally on brands and brand management, believing that while products are

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made in factories, a brand is made in the mind and bought by the consumer. The

result for Nike was innovative ad campaigns, superstars like Michael Jordan,

superstores like Nike Town, and corporate campuses, like the Nike World campus.

The Nike swoosh is believed to the most recognizable brand icon or corporate logo,

conveying Nike without a word. The swoosh was designed by a university student

attending a class taught by Nike CEO Phil Knight. He asked her to create a logo that

would fit on the side of a shoe. When she created the Swoosh, “Knight got the

symbol that would revolutionize [Nike… She] got $35” (Feit & Surpuriya, 1997: 11).

THE SUPER BRAND- NIKE

The current Nike CEO, Phil Knight, started the company in 1964 with Bill Bowerman.

Knight was instrumental in breaking Nike away from Adidas and Reebok when he

realized that importing shoes from other countries using cheap labour would allow

them to challenge the market leaders. A Nike manager describes how Nike and its

executives symbolise the Nike climate: “Emotionally, Nike executives are like top

sportsman – very focused, very determined, hardworking… They want to win”

(Crainer & Dearlove, 2003: 162). Since Nike went public in 1980, its market

capitalisation increased from $386 million to $13 billion.

Crainer & Dearlove (2003: 159) state: “Nike‟s „Just do it‟ slogan seemed to sum up its

whole approach to business”. Between 1995 and 1997, the company‟s sales

increased from $4.8 billion to $9.2 billion. Nike‟s success lies in the massive amounts

of money spent on sponsorships and advertising, that is, on marketing its‟ brand.

Goldman and Papson (1998: 6) state that Nike‟s marketing, advertising, and

sponsorships “constitute the epicentre of innovative strategies that allows enterprises

to capture greater shares of wealth within a global commodity chain”. In 1997, Nike

spent $5.6 billion on marketing, including $4 billion dollar on individual athlete‟s

sponsorship. In 1998, Nike sponsored soccer superstars Ronaldo and Scholes, and

signed a $400 million 10 year deal with the Brazilian soccer team.

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Nike is a transnational or multinational corporation that “links national economies into

a complex web of global production arrangements” (Goldman & Papson, 1998: 6).

Nike‟s products are made up of a complex arrangement of material and non-material

components across national boundaries. The most complicated Nike shoe is made

up of 200 components, but when looking at even a simple Nike shoe, then it is easily

seen how Nike symbolises globalised production. For example, the simplest of Nike‟s

shoes, the Air Max Penny basketball shoe is made up of 52 components from five

different nations, meaning that a Nike shoe would have been touched by at least 120

pairs of hands during production. But Nike is not a manufacturing company or even a

shoe company; it is a sports company. As Feit and Surpuriya (1997: 4) state: “They

were selling sports, an ideology based on the pursuit of excellence in which people's

lives are improved through competition, fair play, fitness, and self-esteem. The new

Nike wasn't simply about shoes and slam dunks, but about promoting a higher way of

life.”

In this way Nike was a brand, an idea and a lifestyle. To keep this image Nike

focused entirely on advertising, marketing and promotion. As Phil Knight says “There

is no value in making things any more. The value is added by careful research, by

innovation and by marketing” (Klein, 2000: 197). By focusing on this, what Nike is

ensuring is one thing, profit. Put in other words, as Goldman & Papson (1998: 7)

state: “Why take on the headaches of building manufacturing sites and organising

and maintaining a labour force, when it makes greater fiscal sense to subcontract the

manufacturing process?.”

In other words, priorities have changed; the logic of the new priority is not to spend

money on machines that will rust, factories that need constant upkeep, and

employees that will age and die; resources should be used on sponsorships,

expansion, and advertising as it is this that will help to build superbrands.

The increased resistance to investing in labor and factories has led to the inevitable

devaluation of the production process, producers and employees. Nike products are

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manufactured in more than 700 factories, in 51 countries, employing over 500,000

workers. Its‟ direct employees are 22,658, most work in the United States in

management, administration, laboratories and logistics, and none are involved in

production. This is contracted to Korea, Taiwan, Thailand, Indonesia and China, who

in turn subcontract different components and its materials to other local companies

(Locke & Siteman, 2002., Went, 2000).

Goldman & Papson (1998: 4) assert that Nike symbolises the globalisation of both

sports and commodity culture. Nike executives frequently state their commitment to

being a global company: “The aim is to sell a global brand through marketing that

appeals to local tastes… The commitment is to be a global company – one

management, one theme, one value, one ethic around the world”.

In this drive and commitment Nike have come to represent the hollowed corporation,

the embodiment of a globalised world. Hollow corporations are mostly form, as the

lack of a stable workforce gives it little tangible content. In such corporations, the

central axis is no longer manufacturing, as production is broken up and dispersed,

but is the marketing of the brand. In the global capitalist system of producing,

distributing and selling goods, the Nike swoosh signifies the globalisation picture of

flexibility (Goldman & Papson, 1998). Flexibility is present in Nike‟s production

facilities, locations and jobs. This may be best explained using the Nike model, which

Klein (2007: 285) describes as “Don‟t own any factories, produce your products

through an intricate web of contractors and subcontractors, and pour your resources

into design and marketing”.

Team Nike, as Klein (2000) states, initiated the no-limits brand spending, together

with complete disinvestment in its workers. Nike is the personification of the product-

free brand. Major companies have embraced the very successful Nike model, which

is characterised by mass layoffs as necessary corporate strategy, and a prioritizing of

the needs of the brand over the needs of workers. But, the factories disappearing

from one country do not reappear in another.

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Along the way, they become something completely different: an „order‟ placed with a

subcontractor who in turn pushes it off to ten more subcontractors, who passes it on

to workers working in basements and living rooms. So, once the sub/contractors take

out their own profit, what is left is the worker – at the bottom of the chain – receiving a

paltry paycheck: “When the multinationals squeeze the subcontractors, the

subcontractors squeeze the workers” (Klein, 2000: 212). This change is so extreme

that superbrands refuse to disclose locations of production sites, using competition as

an excuse, and stating that they, like us, are “bargain hunters in search of the best

deal in the global mall” (Klein, 2000: 202). But, their „bargain hunting‟ has extreme

negative consequences for human beings, for the workers, as all the MNCs like Nike

are interested in are materials, low prices and delivery dates, paying no attention to

how low the prices are, the workers, or working conditions.

Behind the shiny façade of innovate marketing and design, health and fitness, and

athleticism, is a series of public relations nightmares: the reality behind Nike. Locke

and Siteman (2002: 9.) state that Nike became a poster-child of “the potential risks

and problems which globalization creates for all multinational corporations”. Besides

the Swoosh, the other „S‟ word that became synonymous with Nike is sweatshops.

Nike has come under increasing scrutiny for underpaid workers, low wages, child

labour, mistreatment of workers, and poor working conditions. Phil Knight himself

admits that Nike “has become synonymous with slave wages, forced overtime, and

arbitrary abuse” (Klein, 2001: 375).

Nike has been accused of not being able to set aside the bottom line – profit – for a

moment, to consider the exploitation of mistreatment of the very workers that are

getting them to the bottom line. A CLR report (1997) examined the working conditions

in sports factories in China making shoes for Nike, and found that practices and

conditions thoroughly violated Nike‟s own code of conduct, the Apparel Industry

Partnership code of conduct and Chinese labour law. There are no trade unions and

any sign of organising is seriously punished giving workers no outlet to express

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injustices. Even though the workday is supposed to be eight hours long, the normal

workday is 11-12 hours, and 2-5 hours of compulsory overtime which, if refused, can

result in a docking of a day‟s pay or even dismissal. When a worker does not fulfill

their unrealistic daily quota, they are forced into unpaid overtime. Yet, conditions

seem only to be getting worse in these factories in these Export Processing Zones.

To make the products for Nike and superbrands to put their logo on, the free-trade or

EPZs, such as that in China described above, emerged (Klein, 2000). Life stops

inside these zones: it is a place of pure work and a tax-free economy zone. While

China has 18 million workers in 124 zones, in the world, there are over 1000 EPZs in

70 countries with 27 million workers: $200-250 billion worth of trade flow within these

zones. The similarity of the workers lives within the EPZs are striking: long workdays

(12-16 hours); young women workers working for sub/contractors from Korea,

Taiwan, or Hong Kong; contractors filling orders for companies in US, UK, Japan or

Germany; harsh management; abusive supervisors, below-subsistence wage;

unstable contracts; low-skill monotonous work; and migrant workers.

Furthermore, industries like Nike have led to and are typical examples of the

deskilling of production: “the migration of shoe assembly jobs from one Asian nation

to the next is only possible if the work of making shoes is deskilled” (Goldman &

Papson, 1998: 12). Workers perform the same highly specialized gluing and stitching

tasks over and over again. Workers are penniless and homeless, feeling „alien‟ in the

factories, and „alien‟ in that they are migrant workers who have come for the promise

of good jobs and wages, which they have not yet seen. Sleep deprivation,

malnutrition and homesickness combine to result in deep disorientation and

alienation. This is, as Rose (1990: 56) states, the basic alienation that lies at the

heart of work: “Workers work because they have to, they work at the behest of others

in a process they do not control, to produce goods or services they do not enjoy…

work is made up of the elements of obedience, self-denial and deferred gratification”.

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There is another way in which workers have become separate and alienated from the

products they create. This is in the disparity of what they earn creating the shoe and

how much they would have to earn, or rather how long they would have to work to

buy that shoe. For example, the women who make Nike shoes earn $1.35 an hour. A

Chinese worker working a fifty-hour week would have to spend half her monthly

income to buy a pair of Air Jordan XVs (Collins, 2001). Another disparity lies in what

workers earn creating the shoe and the celebrity‟s endorsement deal for that same

shoe. Michael Jordan earned $20 million in 1992 to put his name on a Nike shoe,

more than the total wages of all the women in East Asia working to create that shoe

(Collins, 2001), or of the entire workforce of Nike contractors in Vietnam (Clair, 2008).

Thus, the Nike product, or as Marx describes it – commodity – is separate from the

person who created it. Marx describes this mysterious relationship and commodity as

follows: “In it the social character of men‟s labor appears to them as an objective

character stamped upon the product of that labor; because the relation of the

producers to the sum total of their own labor is presented to them as a social relation,

existing not between themselves but between the products of their labor” (Collins,

2001: 2).

Goldman and Papson (1998: 11) argue that while once the locus of value production

used to be those who work with their hands on the products, now the locus of value

production sits where the symbolic workers, the advertisers, marketers and designers

are, as they are believed “to contribute the greater share of value to the product”.

Thus, the relationship between the worker and the actual value of their labour is

obscured by a system of surplus capital and commodity exchange, specifically, profit.

Or, as Marx would say, the operation of capital is built on the exploitation of labour

(Goldman & Papson, 1998)

Three of the more publicised consequences of Nike‟s superbrand outsourcing are:

the exploitation in Indonesia, the child labour in Pakistan, and the health and safety

conditions in Vietnam (Locke & Siteman, 2002). In Indonesia, exploitation, poor

working conditions and abuse of human rights are prevalent in Nike factories. The

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factories refused to pay workers the minimum wage, which only covers 70% of their

living needs, clearly not enough to support a family. Supervisors and managers are

abusive to the predominantly female workforces who are „terrified‟ to speak back as

their meager wages will be cut if they do.

In the city of Sialkot in Pakistan, which specializes in export-oriented and labour-

intensive goods, Nike was exposed for child labour in 1996, where an article was

published that included a photo of a 12-year-old boy stitching a Nike soccer ball.

Nike‟s defense to such criticisms was that factories are owned and run by

independent sub/contractors and not by Nike. Goldman and Papson (1998: 7) assert

that by saying they do not know anything about manufacturing, as they are marketers

and designers, Nike was able to distance itself from its‟ treatment of workers and its‟

working conditions, using the defence that they really did not know, and adding – as

one Nike executive states – “I don‟t know that I need to know”.

But it is probably in Vietnam that the most shocking worker conditions could be found.

In Vietnam, Nike employs around 25,000 workers who produce over a million shoes

each year. Nike workers, largely female, are exposed to severe physical, verbal and

sexual abuse. Clair (2008) cites cases where 60 female workers were forced to run

laps around the factory as punishment for not wearing the right shoes and many

women fainted due to the heat and had to be hospitalised, while in another case a

dozen women were violently beaten on the head with a shoe, and in another case

workers mouths were sealed with tape as penalty for talking while working. Critics

say that Nike is aware of these conditions for a long time and are clearly not

controlling its contractors, turning a blind eye to these abuses for one simple reason:

profit.

In Vietnam, it costs Nike $1.50 dollars to produce a shoe that will be sold for $150

dollars in the US. This is because the average worker earns around $42 a month, or

$500 a year. Compared to the paycheck of the Nike CEO, the inequality is shocking

grotesque. As Clair (2008) states: “Knight, who owns 100 million shares of Nike

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stock, pulls in roughly $80 million in dividend payments each fiscal quarter. At that

pace, a Vietnamese worker would need to toil for nearly 4,000 years to equal Knight‟s

annual income” (counterpunch.org).

GLOBALISATION

Globalisation is not positive for everyone. According to Went (2000: 4), it is “being

used as an excuse to give unaccountable, bureaucratic international organisations

more and more authority to decide and punish and increasingly to limit the scope for

economic or social choices at the national and regional levels, by means of

international treaties, rules and structures”. Globalisation has led to a persistent

dictatorship of the market, greater social inequality within and among countries, and a

flattening of wages, working conditions and social security. National states or trade

unions are increasingly powerless in the face of globalisation. The process is perhaps

best described by Brecher and Costello (1998: 18): “As almost every factor of

production moves effortlessly across borders, the very idea of an American economy

is becoming meaningless, as are the notions of an American corporation, American

capital, American products, and American technology. A similar transformation is

affecting every other nation”.

According to Went (2000), there are four aspects of globalisation that has changed

the functioning and organisation of the world. First, the world economy is one as

global markets are replacing national markets. MNCs use these global markets as a

natural strategy. Second, the influence of MNCs keep growing and global companies

are organizing production and distribution globally, with major consequences for the

structure of organizations and for employees. Third, power has shifted away from

governments to supranational organizations like the World Bank, IMF, G7, WTO and

OECD. Fourth, macroeconomic policies are being globalised, with the neoliberal

paradigm becoming unchallenged and being applied globally. Full employment are no

longer a goal, instead emphasis is on export-oriented growth, free trade, labour

market flexibility, more market and less state social policy, and privatisation.

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Globalisation can be considered in terms of: trade, international mergers and

takeovers, technology, the global assembly line, and multinationals (Went, 2000).

World trade has reached an unparalleled level: “Since the late 1980s international

trade has been growing twice as fast as the world‟s combined gross national

products” (Went, 2000: 10). There is also a rapid increase in mergers and takeovers

and foreign direct investment (FDI). FDI especially has prompted globalisation faster

than international trade. By 1997, 143 countries had adopted special laws to

encourage FDI and most countries have adapted their economy in some way to

attract foreign investor.

Technology, of course, plays a major role in all of this. MNCs take advantage of new

technologies and considerably reduced transport and telecommunication costs to

produce goods and services through processes spread all over the world. Products

are being assembled with parts brought from all parts of the world. This is the global

assembly line; a process of outsourcing, contracting and subcontracting that has

major implications for the organization of work and the employees‟ position within the

MNCs. To increase profit, MNCs can close or move its operations to a cheaper

location, or threaten to gain concessions. Globalisation has given the MNCs power to

put pressure on workers and producers by weakening their bargaining power as a

result of increased global competition (Carr & Chen, 2001). Finally, the number of

corporations operating transnationally amounted to 53,000 in 1997 with 448,000

foreign affiliates. The MNCs share of world economy keeps growing and this gives

them considerable power over weaker countries and economies.

The results of this rapid globalisation are diverse. The following are considered as

been relevant to and as having played a major role in the rise of the superbrand.

These are: dictatorship of the financial markets, race to the bottom, privatisation,

increasing migration, growing social inequality and commodification (Went, 2000).

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First, due to internationalisation of capital markets and liberalisation of capital flows,

the suppliers of capital are the ones dictating financial markets, „making and breaking‟

many governments and their countries. Countries who want to draw this capital or

FDI must adapt to the wishes of those who have the capital, and in this way they are

pressurised to adapt their policies to the demands of the market, that is, those who

hold the capital. Developing countries are pressurised to prioritise export and

payment of foreign debt. The result is that these countries citizens “interests and

needs remain neglected as long as their governments do not see or do not opt for a

way out of the IMF‟s straightjacket” (Went, 2000: 27).

So, even though factories in the EPZs do not pay taxes or create infrastructure, they

are there because of the trickle-down theory: the belief that EPZs create jobs and

workers income from these jobs will boost the local economy. Governments of

developing countries fear the loss of foreign factories and investment and offer 5-10

year tax breaks, lax regulations, their own workers with the lowest wage, and dirt-

cheap rent: “a fantasyland for foreign investors” (Klein, 2000: 207). In addition, labor

laws are not being enforced within zones because governments regard EPZs as

foreign trade policy, not a labor rights issue, and because they promised a cheap and

compliant workforce to foreign investors, EPZ factories are run according to rules that

break the labor laws.

Second, concerning the race to the bottom, as the markets become more integrated

and global, and restrictions on transnational flow of goods and services are quickly

being eliminated, the result on wages, working conditions, employment and social

security are devastating. According to Brecher and Costello (1998: 22), the most

direct result of globalisation is “the „race to the bottom‟ itself – the reduction in labor,

social, and environmental conditions that results directly from global competition for

jobs and investment”.

This race to the bottom is predominantly a vehicle for the MNCs, is sometimes

promoted by governments, or is imposed by the World Bank or IMF. By moving

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production sites to countries with cheaper labour or by importing goods from these

countries or by even threatening to do this, working conditions are under constant

pressure from MNCs whose profits increase by billions while workforces diminish

more every year. Went (2000: 17) states “the continuing shift of industrial production

to low-cost sites in developing countries where worker protection is lower is likely to

increase the global incidence of occupational disease and injury”.

Development is established on lower wages as trade in goods, services and capital

becomes freer as a result of international norms and policies. MNCs have become

obsessed with continual cost-cutting through the shrinking of their workforces and the

consequent saving on wage and social security. Eden & Lenway (2001: 383) state

that the MNC is one of the very few benefiting from globalisation, being that it is an

embodiment of globalisation, “the prime movers behind globalisation, taking

advantage of the increased openness of domestic economies to integrate their

activities across national markets and societies”.

The side effects of this are manifold. As countries aim to become more competitive in

the global company by reducing wages and job and social security, incomes and

infrastructure worsens. Low wages and less public spending result in less buying

power or stagnation, recession and unemployment.

Third, companies all over the world are being privatised on a large scale. Third World

governments are being pressurised by the World Bank to privatise even more so that

their economies may be more efficient. While governments earn money by selling

companies, making tax cuts possible and attracting investors, this results in job

losses, less affordable products, and worse service provision.

Fourth, globalisation has increased migration and migrant workers. Went (2000)

asserts that it is only logical that with the increase in the international movement of

goods, capital and people, there will also be an increase in the movement of people

across boundaries. People are uprooted or see migration as a compulsion especially

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when work in another country is thought to be more economically desirable. In

addition, because of the increased demand for low-paid and low-skilled work, these

jobs are often left for migrant workers.

Fifth, the broader reach of the market is supporting commodification, where

everything is becoming a product to be bought and sold. Furthermore, because of the

declining role of the state in financing and organising social and public services,

education, health care and culture are increasingly being commodified by brands and

MNCs, primarily through sponsorships. As Went (2000: 43) states, “money plays a

steadily more important role in people‟s everyday experience”.

Finally, the economy is now characterised by rising inequality and slow or no growth.

All the features of neoliberal globalisation such as increasing liberalisation,

deregulation, privatisation, flexibility and internationalisation are leading to the social

differences within and among countries. Increased profits are associated with rising

unemployment and reduced pay. A recent report stated: “Corporate restructuring,

labour shedding and wage repression in this world of sluggish growth have thus

become the order of the day, generating increased job and income insecurity” (Went,

2000: 36). At the same time as working conditions and income are under strain

because of global competition, the MNCs ability to find the most profitable

investments keep increasing.

Their immense power keeps growing, resulting in, as Chomsky (1999: 93) states,

“sectors of enormous wealth and privilege alongside an increase in the proportion of

those who will labour under all the hardships of life, and secretly sigh for a more

equal distribution of its blessings”. The result is that the combined wealth of the

world‟s 225 richest people, that is $1 trillion, is the combined annual income of the

world‟s poorest 2.5 billion people. There is therefore an increasing disparity between

the rich and the poor. Brecher and Costello (1998: 28-29) state: “Globalisation has

depressed the wage growth of low-wage workers. It‟s been a reason for the

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increasing wage gap between high-wage and low-wage workers… [which] the global

realignment of work and wealth is, if anything, the bigger culprit”.

The increased power that globalisation gave MNCs allowed them to diminish their

dependence on home countries, putting much more pressure in many ways on other

countries‟ workers, unions and governments and playing them against each other.

Went (2000: 93) states: “They could obtain lower tax rates – „or else we‟ll move

abroad‟ – more subsidies – „or else we‟ll move abroad‟ – lower direct and indirect

wage costs for the same or more work – „or else we‟ll move abroad‟ – less say by

unions or government in what happened in the company – „or else we‟ll move

abroad‟…”. All this contributed to the rapid increase in profits for the MNCs. This is

because all MNCs are interested in are materials, delivery dates, designs, and low

prices, paying no attention to how low the prices are, the workers, or the working

conditions.

In addition to making it easier for MNCs to put governments and countries under

pressure, the globalisation of financial markets has also made it effortless for MNCs

to search around the world for places where they could find work and receive the

highest possible returns. In other words, to increase growth and profit, MNCs look for

countries where materials and labour where cheaper. For example, in 1987 Nike had

76% of its production in South Korea and Taiwan, by 1998 this had dropped to 7%,

and 78% of Nike shoes came from Indonesia and China, as these were much lower

wage regions. Nike exploits the poor Asian nations “where there is a ready surplus

labour force in need of work and wages, even if those wages are below the poverty

line” (Goldman & Papson, 1998: 9).

NEOLIBERAL POLICY OR NEOLIBERALISM

There has been a shift in macroeconomic thinking and actual policy from World War

II and the late 1970s, and the late 1970s to the present. This shift may be described

as a movement from the Keynesian-Fordist policies to free-market economic policies.

Mohamed (2008: 6) argues that it is important to note that this shift is ideological, and

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this “ideology of free market capitalism is the motive force behind the globalisation

that occurred since the late 1970s”. Associated with the shift from the golden age of

capitalism to the neoliberal era is the rise of Thatcherism in the UK and Reaganism in

the US.

Later, the decline and fall of the USSR, political and economic changes in Europe

and the fall of the Berlin Wall strengthened free market policies. The credibility of

such policies is “judged by an elite few… who operate in the financial markets… in

the financial centers of a few developed countries, such as the US, Germany, Japan

and Britain” (Mohamed, 2008: 7). Thus, the only „credible‟ policies were those set out

by the neoliberal Washington consensus, that is policies that emphasised low fiscal

deficits, low inflation, liberalisation of international trade and financial markets, a

smaller role for the state in the economy through deregulation and privatisation.

Mohamed (2008:9) states that “the move from „patient capital‟ to „impatient capital‟ as

a result of changes in the international financial markets is an important change from

the Golden Age to the neoliberal era”. The increased pressure to raise profits and the

increased global competition has led MNCs to treat workers badly. To increase

profits, these corporations cut back on employees, and decrease wages by reducing

the benefits of workers. There has been an increase in casual and temporary

workers. MNCs are able to reduce wages and benefits because of the credible threat

they have to move labour to other parts of the world where work is cheap, unions are

weak and markets are less regulated, “Indeed, an important phenomenon of the

neoliberal era has been geographic relocation of firms to take advantage of lower

costs in different countries that offer lower wages and less stringent regulation”

(Mohamed, 2008: 10). Whatever gains workers may have made through unions in

earlier times were reversed by this constant threat. The alliance between unions,

labour movements and factory or owners fell to pieces with the increasing

acceptance of the neoliberal agenda.

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Neoliberalism is therefore the current economic paradigm that, by protecting the

interests of the very wealthy and less than a thousand corporations, allows them to

control public and social life so that their personal profits may be maximised. It

emphasises free markets, prices being set by markets, the liberalisation of trade and

finance, privatisation, and consumer choice. The government is believed to be

parasitic, and unable to do any good, and is thus undermined. The architects of the

neoliberal „Washington Consensus‟ are, according to Chomsky (1999: 20), “the

masters of the private economy, mainly huge corporations that control much of the

international economy and have the means to dominate policy formation as well as

the structuring of thought and opinion”.

These people reflect the unequal distribution of power in society, those in power use

or rather misuse their power in their own interest, despite the severe consequences

this has on one other. The neoliberal policy is an expression of this power, as it is a

policy that privileges privately owned and run corporations above everyone else, and

is therefore in favour of their business interests, rights, and of course, stability.

Stability here means security for the multinational corporations, whose welfare, in

other words profit, needs to be both preserved and multiplied.

The neoliberal agenda has been propagated by powerful governments and its‟

agencies such as the IMF and the World Bank. These powers have forced the

adoption of trade policies specifically intended to allow MNCs to dominate the

economies of all nations but having no liability to the people of those nations,

effectively allowing corporations to rule the world. Lowering taxes on the wealthy, the

exploitation of the weak and poor, environmental violations, dismantling of public

education and social welfare have not „needed‟ to be defended, because, as

Chomsky (1999: 8) states, “any activity that might interfere with corporate domination

of society is automatically suspect because it would interfere with the workings of the

free market”. Thus, an alliance, backed by the influential tool of money, was created

between the most powerful governments and the MNCs. What defined this alliance

was, according to Korten (2001: 4), “to integrate the world‟s national economies into a

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single, borderless global economy in which the world‟s mega-corporations are free to

move goods and money anywhere in the world that affords an opportunity for profit,

without governmental interference”.

This has shifted power away from governments to a handful of corporations with

huge economic and political power and one goal: short-term financial gain. Korten

(2001: 22) states that corporations display the market tyranny that claims living

spaces, makes democracy ineffective, devastates employment, displaces people,

and “feeds on life in an insatiable quest for money”. Thus, economic policies have

overpowered democracy.

Proponents of neoliberal globalisation state that for developing countries to attract

foreign direct investment (FDI), they need to adopt the stipulations of the neoliberal

policy: liberalisation of trade and finance, low (or no) tax rates, and strong fiscal

policies. The governments of developing countries believe that FDI is necessary for

development of their country‟s economy, and for that reason implement neoliberal

policies, and many incentives – often at the expense of workers and working

conditions – in the expectation and hope that MNCs will situate themselves in their

country, or will not leave their country for a country where the incentives are greater,

in terms of lower wages and worse working conditions.

Thus, as Mohamed (2008: 28) states, “the bargaining power of MNCs relative to

developing countries increases considerably as a result of global competition for

FDI”. FDI and the activities of the MNCs often occur at a detriment of workers and

citizens who see none of the promised benefits.

Mohamed (2008: 36) asserts that the shift in thinking that the hegemony of the

neoliberal ideology has brought about is no longer the belief that economic policy

should be exercised to create full employment, but rather a principle that is “aimed at

keeping people in financial markets happy”. Labour market flexibility and capital is

favoured and the results of this are extensive.

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The power and control relations between employees and employers have drastically

changed. Working conditions have deteriorated, and job security and benefits have

degenerated, as MNCs have become more internationalised. Casual and informal

work has increased, while there has been a feminisation of many economic sectors.

Workers, labour movements and trade unions have become weaker and face

continuous threats of relocations and job losses. Thus, as Mohamed (2008: 37)

states, “the impact of neoliberal ideology has meant that, on the whole, economic

policies and globalization have had a negative impact on labour and that the

struggles of workers and their trade unions have become more difficult”.

The architects of the Washington consensus were warned that the process would

lead to a low-growth and low-wage economy, but they were more interested in the

short-term profits. The long-term destructive consequences of this gain and profit and

the disappearance of the middle class due to the increasing discrepancy between the

poor and the rich was not considered. Chomsky (1999) cites Krugman, who makes

five central points about such policies.

First, the knowledge on economic development is limited and should not be used to

make generalisations or to form policies. Second, the conclusions made in favour of

policies often have an unstable basis. Third, ideas about policies are continuously

shifting among its propagators. Fourth, it is often agreed that policies are based on

„bad ideas‟ and did not, as believed, serve their intended goals. And finally, Krugman

(as cited in Chomsky, 199: 25) states: “Bad ideas flourish because they are in the

interest of powerful groups. Without doubt that happens”. These bad ideas are

therefore only good for those who created them.

CONCLUSION

Through these brief discussions on globalisation and the neoliberal policy, it is

apparent how both have been instrumental in facilitating the rise of superbrands like

Nike and their MNCs. It is clear how neoliberal policy and globalisation has led to the

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massive power that the superbrands‟ MNCs have and are able to exert on the weaker

nations and their workers, leading to the devaluation and exploitation of workers in

numerous ways, such as those described in part one of this essay. In short, what

globalisation has done by way of neoliberalism is, as Chomsky (1999) states, put

“profit over people”. Nike, as most know, is the name of the Greek goddess of victory.

But, as everyone knows, Nike‟s only victory has been profit, profit that has come at

the expense of workers, their lives, job security, and working conditions.

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