7

Following is an abridgement of a pa-
per on multinational corporations present-
ed to the Committee on Development and
National Independence of the World Con-
gress of Peace Forces, in Moscow in October.
The author is Associate Professor of History,
Simmons College, and Research Fellow in
Ethnic Studies, Harvard.

By Dr. Mark Solomon

a the end of World War II. there

has been a rapid expansion of .

“multinational” corporate operations.
MNs first appeared in the early twentieth
century as both a feature and outgrowth
of the monopolization of enterprises in the
industrialized capitalist countries, and of
imperialism. Their major interest is not
in trade as such, but in profits. They do
not simply ‘“‘buy from and sell to"’ other.
nations. The editor of the Harvard Busi-
ness Review ~defines the multinational
“as having production and marketing
facilities in many countries, enjoying
worldwide access to capital, depending
on foreign income, and being managed
with a worldwide point of view.”

MNs engage in direct investment in
foreign nations. moving through success-
ively complex stages from the simple
export of products to foreign ‘countries,
to the establishment of sales organiza-
tions abroad, to efforts to control and/or
purchase foreign firms, to the establish-
ment of foreign manufacturing facilities
and finally, to the multinationalization of
management and ownership of overseas
enterprises — from top to bottom. The
term *‘multinational”’ corporation is to-
day generally applied to businesses oper-
ating in at least six countries, whose
overseas subsidiaries account for at least
one-fifth of the parent’ company’s assets
and sales, and which report $100 million
or more in annual sales. This criteria is
piddling for the 200 American industrial
firms estimated by the U.S. Department

of Commerce to the ‘‘multinational" in

scope.

General Motors alone registers an-
nual sales approaching $30 billion. more
than the Gross National Product (GNP)
of all but 15 countries. In addition, Ford
Motor Company, with an annual income
greater than Austria’s GNP, General
Electric, IBM, Chrysler, Mobil, ITT,
Gulf, RCA, General Telephone, etc., are
among the U.S. multinationals (two-
thirds of the multinationals in existence
are U.S.-owned) which account for
80% of all direct U.S. foreign investments,
with annual sales of nearly $200 billion. It
is understandable that they have been
called ‘‘invisible empires.”’

Following the lead of the first multi-
nationals which concentrated in the early
days upon extractive mining and petro-
leum industries, a diverse group of power-
ful corporations has accelerated over-
seas investments. From 1950 to 1971 di-
rect overseas investments by United
States MNs increased sevenfold from
$11.8 billion to over $78 billion. In addi-
tion, banking interests have added a dra-
matic element to expanding U.S. foreign
investments. U.S. banks are ac-
quiring assets overseas at an even faster
rate than most multinational corpora-
tions. A recent report noted that foreign

branches of U.S. banks have some $70
billion in assets abroad, nearly ten times
the $7.5 billion of mid-1965. 2

The oppressive effects of MNs are by
no means confined to the underdeveloped

-areas. Seventy percent of the foreign

operations and transactions of U.S.-based
multinationals are with other industrial-
ized nations. United States interests own
45% of Canada’s manufacturing facilities
alone. The search for cheap labor is ex-
tended to both industrialized and under-
industrialized countries. Not only are
workers in developed sections pitted
against labor in neo-colonial areas, but
workers in various industrialized nations
are forced to compete against each other.
General Electric moved its clock and tini-

er works from Ashland, Massachusetts

(throwing 1,100 workers out of jobs). to
the depressed wage area of Taiwan. But
Litton Industries bought the Royal Type-
writer Company of Hartford, Connecficut,
where hourly wages were $3.60 and moved
that operation to Hull, England, where
the hourly rate was $1.20. Seventeen hun-
dred Hartford workers were thrown out
of work. When a U.S.-owned glass manu-
facturing subsidiary in France was faced

with strike action, production was shifted _

to countries which were Common Market
members and the products were shipped
back to France. The French strike was
broken.

The flight of thousands of, jobs from
the United States to depressed wage areas
has led the chief economist of the AFL-

CIO to declare that in ‘‘the international

economic arena... capital is mobile, labor
is not.”
The United States now has one of the

PACIFIC TRIBUNE. FRIDAY, JANUARY 25, 1974— PAGE 6

highest unemployment rates of any indus-
trialized nation, but it has gone from a
trade surplus of $7 billion in 1964 to a
trade deficit of $7 billion in 1972. The
beneficiary is the multinational which
relentlessly seeks dominance over foreign
labor and locks that labor into depressed
wages — to the detriment of labor every-
where. :

The negative impact of multinational
activity is felt on many levels of econom-
ic life within industrialized nations. An-
drew Brimmer, a governor of the Federal
Reserve Board of the United States re-
cently warned that multinational bank-

ing activity was having a detrimental
effect upon the availability of credit in.

the U.S. in such vital areas as housing,
consumer loans, and municipal financing.
Twenty huge multinational banks, accord-
ing to Brimmer. were holding vast sums
in foreign offices for speculation in over-
seas investment. MNs have also*been re-
sponsible for collossal increases in *‘mo-
bile money” (currency that-floats inter-
nationally). At the end of 1971 multina-
tionals controlled a staggering $268 billion
in short-term liquid assets. This is far
greater than the assets held in national
banks. In the recent dollar crisis, half the

currency dumped on the market for a_

quick killing (mainly at the expense of
the U.S. dollar) was known to be from
predominantly U.S.-based multinationals.
MNs profited enormously from interna-

tional currency fluctuations while labor

in the United States and elsewhere bore
the burdens of currency inflation.
While victimization by the policies of

the giant MNs is a fate shared by all wo
ing people, it is in the relations betwé
multinationals and “less industrial
nations’”’ that the exploitative policies
these corporations are most clearly
vealed — and where monopoly, neo-col
ialism, and racism merge into a SI
pattern of oppression. The average raté
return on U.S. investments in unde
veloped countries is considerably hig
than multinational investments in |
veloped countries and nearly twice
rate of domestic investments.

U.S. Department of Commerce
gures. show that for corporations inv@)
ing in the less industrialized nations ©
tween 1950 and 1965 the amount of P
leaving those countries was 264% of |
capital inflow. This is in contrast to
rope and other developed areas, W
the profit outflow was 74% of capital
flow. Salvadore Allende explained t0
United Nations why his country had
tionalized U.S. properties: ‘‘Uncontr@
economic power... is the force Wl
threatens us with stagnation, with wo!
ing our dependency, and therefore imP
ing our development.”’

Throughout Chile’s history, Ame!”
copper companies derived substal
profits from the copper mines, while
tributing little to the nation’s eam)
and growth. Between 1955 and 1970 #
conda Copper averaged 21.5% in chill
profits, while averaging only 3.6% in 9
countries. Recent statistics for the *
ippines show that returns from S¥
holders’ equity in the timber indus
was 15.8% (in 1971). but 6.8 in the
in mining it was 53.9% compared
13.8°c: and in rubber 36.4% compat*

WORLD MAGA