National States are not isolated in the world. They are not unconnected units. On the contrary, they relate to each other through formal organizations. In general terms, international organizations arrange affairs among nations, following certain criteria, rules and actions. That is why we speak of an international system. In this system, each Nation-State, retains its sovereignty and participates in agreements voluntarily.
Supranational institutions, on the other hand, are those in which States deposit part of their sovereignty through formal agreement, consent, or submission. The name is derived from the power they exercise over each member State and the international system, imposing rules that remain outside (or above) the legal and political frames of each State. When we speak of the global economy, for example, we refer to a multinational activity that, though it can include International agreements, leans more towards actions that are outside the range of politics and regulations of National States. While the European Union is an example of a supranational confederation, the global economy, has been organized less formally, although it heads toward the creation of institutions and its legal codes.
The United Nations, established in 1945 with the sponsorship of World War II`s winning nations, has the explicit purpose of promoting peace, order and stability throughout the word. Its main internal structures are the General Assembly and the Security Council, the Economic and Social Council and the International Court of justice.
The General Assembly is composed of representatives from all member States; and each member is entitled to one vote. It meets in annual and special sessions when summoned by the Security Council or requested by the majority of its members.
The Security Council consists of 15 members, five of which are permanent: Russia, the United States, England, China, and France. The remaining ten are elected by the General Assembly among its members for two-year terms. The Council has the primary responsibility of contributing to maintaining peace and security and it can investigate any dispute that threatens it.
The International Monetary Fund came about as a result of the international conference of economists that took place in Bretton Woods, New Hampshire, in 1944. The purpose of this conference was to establish a new global economic order that adapted to prevailing world conditions after World War II, under the supposition that capital no longer had a nationality. As a result of the agreements, the International Monetary Fund (IMF) and the World Bank were created.
The Fund was to provide loans to nations impoverished by war that needed to stabilize their economies, so that they did not have to devalue their currencies. Later on, the Fund took on other duties such as refinancing the debt of countries that cannot repay debts, when a failure to do so would threaten the stability of the world”s economic system.
The International Monetary Fund has become a controversial organization because it offers credit, provided that the receiving country adopts public policies dictated by the Fund. These practices have been object of controversy and complaints by disadvantaged sectors and by those who think that it is necessary that the State maintain some degree of responsibility over the economy to maximize the development of national resources and to assure social well-being of all.
The World Bank was initially established to provide funds to countries affected by World War II, particularly to those in Europe. Eventually, its duties were refocused so that it could finance development in third world countries.
The World Bank is also a controversial organization. It has been accused of supporting ecologically harmful projects and favoring the infiltration of multinational First World companies into disadvantaged countries. Its policies have provoked large protests and confrontations, especially on the dates and places where annual meetings of polemic organizations, such as the World Social Forum, take place.
Multinational Corporations are private, profit-making companies. Although they may have their management in a particular country, their manufacturing, distribution, and service operations are found all over the world. What makes them organize as global entities is the commercial requirement of reducing costs and increasing earnings. They take advantage of jurisdictions where there is plenty of inexpensive manpower and where tax advantages for capital investment are offered. Multinational corporations have grown so much that some have larger operational budgets than many countries.
They tend to create conglomerates of vertical control. Some subsidiary companies extract natural resources, such as oil, copper and other minerals. Others elaborate products from extracted raw materials. Another sector distributes and sells the products. There are also services companies, such as airlines, multinational banks, or telecommunication firms.
It has been argued that these companies are willing to move their facilities to any place that offers larger cost savings, leaving hundreds or thousands of workers on the street without notice at any given time. It has also been argued that these companies influence political decisions through corruption of government officials and businessmen.
Third world countries resent that many of these companies, although they produce employment, frequently pay marginal wages without improving living conditions. It is further argued that their predatory habit has had a negative impact on natural resources; that they compete with improper advantages in the local economies; that they produce economic imbalances, and that they exercise limitless influence on local and national political processes.
Raúl Cotto Serrano
Political Sciences Proffesor
University of Puerto Rico-Río Piedras
Author: Proyectos FPH
Published: September 27, 2010.
This post is also available in: Español