This article was originally published in the June 1983 issue of the Harvard International Review.
What forces and trends will shape the future role of multinational corporations in our society? And to what extent will new developments in science and technology be a factor?
First of all, the complexion of the political government in Washington will have a great deal to do with this. If the national government pursues a strong law enforcement and anti-trust policy—perhaps to the oil companies or to the raw-materials multinationals or to the banks—then there will
be a restraining force put on the ability of these
corporations to contravene market forces and to
engage in bribery or other illegitimate political
influences in other countries. The enforcement
of the anti-bribery law is also a function of who
is going to be in power in Washington. I think
it is not going to make that much of a difference
given the convergences between Democrats and
Republicans. Both are either indentured to or
intimidated by multinational corporations. Either
they are part of the multinational corporate
network—such as how some representatives in
the Reagan Administration are former executives
of Bechtel—or they believe that multinationals
hold so many chips, in terms of the economy
and development, that they can’t afford to offend
them. So in the foreseeable future, about the only
difference one can see between a Democratic and Republican administration is one of the degree to which
the multinational corporations are encouraged to use
their power in anti-social ways, not the degree to which
they are restrained structurally by being more accountable
to the community and to the political system.
In terms of public opinion towards the multinationals, I think their greatest vulnerability is the manner in which they are perceived as fleeing the country, such as closing down factories here and going to Singapore, Hong Kong, Mexico, or Brazil.
An additional trend is seen in the area of certain sciences and technology; there is a situation in the energy sector that is of interest. That is, in quantified terms of energy produced and saved, since 1979 there has been a far greater contribution by renewable energy sources and energy efficiency in this country than by fossil fuels or uranium. This continued trend towards renewable sources such as wood-burning and solar-based energy systems could weaken some energy corporations as country becomes more reliant on renewable energy and the process of energy conservation becomes quantitatively significant.
What will global corporations in the year 2000 be like?
There will be fewer and larger global corporations. Whereas now you have about 200 major multinationals, there are likely to be about 130. Lee Iacocca, the Chairman of Chrysler Corporation, was quoted in a magazine article a few months ago as saying that by the year 2000 there are likely to be only four major multinational companies outside of the Soviet bloc, and he did not include Chrysler as one of them. He thought that Chrysler would merge, or the implication was that they would become part of a larger auto multinational.
I think, secondly, that there will be even stronger ties between Western multinationals and their respective governments as they relate to the third world. This is already seen, for example, in the multinational banks, the IMF, and the Reagan Administration. What global corporations will try to do is to surround themselves with considerations of national security, considerations of Western foreign policy, and so on, so they can get more advantage in the capitals of the Western world. The oil companies have done that very successfully over the last 35 years, and I think other companies are getting the idea very quickly.
What trends do you observe in the ways in which multinational corporations influence governments, both here and in other countries?
One is the good, old-fashioned bribe, which is still operating all over the world. The second is the ability to play one country off against another country, as if to say, “Well, if you don’t give us what we want, we’ll just go to another country and produce aluminum, because there’s plenty of bauxite that can be produced in other countries.” That’s what they do, for example, in keeping down the price of electricity for their aluminum activities in Ghana. They say, “We can always shift to the Caribbean, we can expand in Australia and get even cheaper power” for the aluminum cycle.
Thirdly, it is to utilize the World Bank and the IMF as a real lever, because when an underdeveloped country gets in trouble, they usually have a heavy debt load and if they are going to be helped by the IMF, they have to meet certain conditions, such as keeping wages down and increasing cash crops for export and perhaps devaluing the currency. And it is quite clear that multinationals know that the IMF and World Bank do have substantial leverage and are not hesitant to work through that leverage, particularly since they are often either involved in or the cause of some of the political and economic trouble that these countries find themselves in.
How significant will the employment, production, and marketing decisions of large corporations be in creating the social fabric of the United States in the 1980s and the 1990s?
The corporate institution is the most dominant one in our society—there is no doubt about that. It is largely because these corporations have not merely expanded in size and have control over jobs, raw materials, modern technology, and capital, but they have moved beyond the market framework. They have enormous influence now, politically, in state and national governments through campaign financing, and through the ability to bring politicians to their knees by simply saying, “We may have to shut down the plant in your district or in your state.” Just the mere suggestion of that is often enough to put the policy that they want into enactment. They are very strong in the political arena.
They are also very strong in the communications arena. Ben Bagdikian, a professor of journalism at Berkeley, is coming out with a book in May called The Media Monopoly, in which he analyzes the 50 major media corporations that are in substantial control. And they are not all media corporations; they are non-media corporations who have subsidiaries in the media. Time, Inc., for example, is controlled by a timber firm. It’s important to recognize that issues which tend to challenge the basic power structure in the United States are not discussed in the mass media with very great frequency. To the extent that they are discussed, they are not discussed with the audience participating, but as quick news bulletins, and very rarely are there two-way interactions between audience and media. Very rarely are there programs which do other than report news. There could be programs that engage in mobilizing the population, but that is not considered proper given the way mass media is currently structured.
Then, in education, look at the connections now between corporations and universities. You have the genetic engineering links between the various chemical and drug companies and universities. And the triad link, of course, between the Pentagon, arms manufacturers, and places like Lincoln Labs at the Massachusetts Institute of Technology (MIT), Princeton, and other universities.
Then you also have the corporate executives who are rich alumni and who help raise funds for the university. Faculty on campus who challenge the power structure often do not get tenure, or they are squeezed out for reasons having little to do with the merits of their scholarship. So the educational area is important. In the elementary schools there is a flood of material going in—free slide shows by the oil and coal companies and auto companies and free pamphlets and booklets, all very slick and well-produced in order to generate the corporate mind-set in the elementary and high school educational arenas.
And so in area after area—education, communications, politics, as well as in the marketplace—corporate values are predominating over non-corporate values. Mercantile values are predominating over non-mercantile values. That is why you see, for example, the pressure in the Reagan Administration to put as predominant corporate values vis-à-vis freedom of information considerations, and so on. When a corporation makes a deal with MIT on genetic engineering research, one of the first provisions is to provide for the secrecy of information produced, which is quite contrary to the academic principle of the free flow and exchange of scientific research and information.
It’s important to recognize that issues which tend to challenge the basic power structure in the United States are not discussed in the mass media with very great frequency.
What about the effects of corporate behavior in less-developed countries?
Well, in less developed countries the effects
can really be cataclysmic. A lot of land that should
produce food to feed people on the fringe of starvation
is turned over into cash crop production for export.
When this money just goes back as far as the local oligarchy
and does not filter down to the mouths of the
people, it can have very cataclysmic effects. I think we
are going to see many more environmental disasters in
undeveloped areas. Already, some countries are saying,
“Well, to earn some foreign exchange, we’ll take the
toxic wastes of the Western world.” You can imagine
how less-than-careful the disposal or storage of these
wastes is going to be in these countries.
When you look at how reckless the use and application—the over-application—of pesticides are in these countries, how they contaminate water and food, you will see major environmental catastrophes.
The main impact of a multinational on a developing country is dependency. The difference between developing appropriate technology and renewable energy in an equatorial-region country, compared with setting up nuclear plants, is that the latter would require major dependency for supplies, for technical knowledge, or even for dealing with accidents. And it is that dependency which is the most unassailable argument against any developing country putting its economic future in the hands of multinationals. The corporations can pull out at any time. They can engage in economic political subversion against a regime that may be too populist for their taste. They can pull the strings through the IMF, the World Bank, and other multinational banks. There is too much power once they get entrenched in these countries.
What is the worst of all possible scenarios for the role and behavior of corporations by the year 2000?
One is that they start trafficking things like recycled plutonium, which Reagan is now giving a ‘go signal’ for, so that governmental control of the international trafficking of weapons-grade material— plutonium—falls more and more into multinational hands. Second is where they can begin to develop much more intrusive pharmaceutical drug policies,
and not just be prescription-only, but by other ways of
distributing drugs that are less ennobling. Third is the
extent to which massive numbers of industrial workers
are replaced by robots. Right now, steel companies are
saying 70 percent of industrial labor can be replaced by
robots in steel companies in 20 years. And, of course,
a fourth is that the corporations become allies, passive
or active, of the arms race—because they have such a
stake in it—instead of putting their citizen’s cap on and
answering questions, “Well, I wonder what is Exxon’s
policy on the nuclear freeze, and why isn’t General Motors
doing something about restraining the arms race?”
It’s almost unheard of. And yet, corporations do have
a lot of power to restrain the arms race. Instead they
are obviously going along with it and profiting from it.
I think we are going to see some countries become
almost like vassals to a handful of major multinationals. After all, if Canada can become almost a supercolony of
a few UK and US multinationals, you can imagine what
some of the smaller African, Asian, and Latin American
countries will likely become if they haven’t already.
One of the characteristics of too many multinationals is that they have a penchant for monopolistic practices and cartels, and for cheating in the marketplace by bringing in government action to prop up their marketplace demands, like bribing governments in order for them to buy Lockheed airplanes. To the extent that that occurs, we will see a strong affinity between authoritarian or totalitarian governments and multinationals. One of the most troubling aspects of multinational corporate history is their ability and willingness and propensity to deal with dictatorial regimes of both right and left, as long as they can do business with them, whether it is Franco’s Spain or regimes in South America, Africa, or the Soviet bloc. And so they can never be relied upon to be active, pro-democratic forces. They can be relied upon to prop up and bring into power dictatorial forces as long as they are allowed to make a profit through a concession they have in the country and the trade they have with the country.
Evidently, you have a unique situation in which almost never do you see a multinational corporation engaging in political activity to further democratic forces. If anything, they want to topple a Michael Manley [former Prime Minister of Jamaica] and popularly elected forces around the world. And when the democratically elected—imperfect to be sure—government of Brazil in 1964 was toppled by a junta, the American Chamber of Commerce in Brazil was openly pleased, and, of course, so was the junta, the US multinationals, and Lyndon Johnson’s offshore warships.
... anything that increases dependency on faraway power centers increases the likelihood of a loss of freedom as well as of the pursuit of happiness and the presence of justice in the society
What would be the best of all possible worlds?
The best of all possible worlds is to develop
a decentralized economic system that is accountable
to its potential victims and, in a domestic framework, for people to increasingly develop their own economy.
That may sound like a throwback to centuries ago, but
actually it is a leap forward to bring together modern
science and technologies in the form of better utilizing
local resources, developing local economic self-resource,
self-determining consumer preferences and tastes,
preserving the soil and water from contamination and
therefore increasing their value and their sustenance,
developing an integrated educational system to keep
this kind of community economic development up to date,
and improving the health arena as well.
I think that anything that increases dependency on faraway power centers increases the likelihood of a loss of freedom as well as of the pursuit of happiness and the presence of justice in the society. So we need, I think to develop alternative models of economic development other than those being imposed by the multinational corporate model, and that very much means more local cooperatives in the poorer areas of the world, as well as a much greater thriving of small business enterprise in this country.