1480 



rise of the nation-state. Within the last ten years, global corporations have grown 

 so fast that their combined total sales exceed the gioss national product of every 

 country except the United States and the Soviet Union. With more than two 

 hundred billion dollars in physical assets under their control, the international 

 corporations' average growth rate since 1950 has been two to three times greater 

 than the growth rate of the most advanced industrial countries, including the 

 United States. In 1971, General Motors, one of the giants of them all, had gross 

 annual sales of twenty-eight billion dollars; Switzerland's gross national product 

 was twenty-six billion, (p. 53) 



The global corporation is revolutionizing the world economy through its in- 

 creasing control over four fundamental elements of economic life— technology, 

 finance capital, labor markets, and marketplace ideology. The internationalization 

 of production means simply that more and more of the world's goods and services 

 are being produced in more and more countries, and that the production process 

 increasingly ignores national frontiers, (p. 54) 



The introduction of the global payroll has produced dramatic changes in world 

 labor markets. The essential strategy of the global corporation is based on a divi- 

 sion of labor. Top management continues to be recruited from rich countries; 

 workers increasingly come from low-wage areas. For a world corporation, this 

 combination is ideal, (p. 5G) 



Advances in the techniques of centralization have made the world corporation 

 possible, and sophisticated coordination at the world-headquarters level remains 

 its chief distinguishing characteristic, (p. 57) 



Perhaps the strongest argument in favor of the global corporations' claim to be 

 engines of development is that they are a source of needed capital for backward 

 countries. Particularly at a time when government-aid programs are drying up, 

 the foreign corporation, it is argued, is a crucial source of the finance capital that 

 poor countries need to stimulate local savings and to obtain foreign exchange, 

 (pp. 68-69) 



[The authors, however, discount this benefit considerably.] 

 The second great contribution to development that global corporations claim 

 they are making, in addition to providing finance capital, is the transfer of tech- 

 nology. According to the conventional development wisdom of the past generation, 

 American, European, and Japanese corporations can help close the gap between 

 rich and poor by sharing their advanced technology with underdeveloped coun- 

 tries so as to help them increase productivity, on which rapid economic growth 

 depends. There is no doubt that the import of technology has had a major impact 

 on poor nations. But, as in the case of foreign capital, foreign technology has not 

 had the positive effects claimed for it. (p. 76) 



[Apart from the criticism that the technology is transferred at a heavy exaction 

 of profit, it is also described as "the wrong kind of technology" insofar as the 

 developing countries are concerned.] ^** 



In summary, the two-part article assesses the multinational cor- 

 poration as a challenge of the unadorned profit motive to the values 

 of democratic society : 



A process of concentration and internationalization has put the world economy 

 substantially under the control of a few hundred business enterprises, and these 

 do not compete with one another according to the rules of the classic market. 

 Second, the interest of these enterprises is world profit maximization, and this 

 may require profit minimization in certain countries and under certain circum- 

 stances. This is but one example of how the interests of global corporations may 

 conflict with the interests of countries in which they operate. Tliird, the poor 

 nations of Asia, Latin America, and Africa, long the hewers of wood and the 

 drawers of water for the international economy, are increasingly becoming the 

 principal sites of new production. This shift, which could not have been predicted 

 even ten years ago, is changing employment patterns and living standards in the 

 United States. Finallj^ this economic transformation is producing a new con- 

 centration of political power in private hands. In short, the managers of the huge 

 corporations are not elected by the people, nor are they subject to popular scrutiny 

 or popular pressure, even though in the course of their daily business they make 

 decisions with more impact on the lives of ordinary people than most generals and 

 politicians. The principal source of their power is their control of knowledge of 



2« Richard Barnet and Ronald Muller, "A Reporter at Lai^e: Global Eeach-I," The New Yorker, Decem- 

 ber 2, 1974, pp. 53. 54, 57, 68, and 76. 



