By Doug Lorimer
It is widely asserted that a truly global economy has emerged or is emerging in which distinct national economies and state policies corresponding to them are irrelevant. The world economy is now dominated by corporations that have internationalised their activities to such an extent that they have no allegiance to any particular nation-state and will locate their investments and operations wherever they can get the highest returns.
Within the workers' movement, these arguments provide union officials with a rationale for urging workers to accept reductions in wages, working conditions and social expenditures in order to preserve jobs.
The concept has also gained acceptance among many former adherents of the radical left, who argue that big capital is now so mobile and powerful, and national states so weak in comparison, that it is pointless for the working class to struggle for state power.
According to the United Nations' World Investment Report 1993, there were 37,000 transnational corporations, which had 170,000 subsidiaries abroad. Ninety per cent had their headquarters in the developed capitalist countries.
British academics Paul Hirst and Graham Thompson, in their book Globalization in Question, note that the great bulk of the sales and assets of transnationals were concentrated in their "home" country or region, "despite all the speculation about globalization".
For manufacturing transnational corporations with headquarters in the USA in 1987, 70% of sales and 67% of assets were in the United States. The bulk of the rest of their sales and assets were in western Europe and Canada. For US-headquartered transnationals engaged in services, 93% of sales and 81% of their assets were in the United States in 1987.
For transnationals with headquarters in western Europe, there was a wider geographical distribution of sales and assets, but 70-90% of them were in their "home" country and other west European countries.
Between 1987 and 1993, there was a growing concentration by transnational corporations of assets in their "home" country, rather than a trend toward "globalisation".
Thus, British-headquartered transnational corporations engaged in manufacturing had 52% of their assets in the UK in 1987, but 62% by 1993. Japan-headquartered transnational corporations engaged in manufacturing increased the share of their assets located in Japan from 64% in 1987 to 75% in 1993, while Japan-headquartered transnational corporations in services increased the share of their assets in Japan from 77% to 92%. US-headquartered transnational corporations in manufacturing increased the share of their assets located in the United States from 67% in 1987 to 73% in 1993.
Transnational corporations have centred both the production and sale of commodities in their "home" countries. And where they have internationalised their operations, these have been highly concentrated in other developed capitalist countries.
Global distribution
In 1992 the total stock of foreign direct investment throughout the world was US$2 trillion. The transnational corporations controlling this stock were responsible for sales of US$5.5 trillion.
The largest 100 transnational corporations accounted for a third of this stock. Sixty per cent of transnational foreign direct investment stock was associated with manufacturing, 37% with services and 3% with the output of primary products.
The distribution of this foreign direct investment was highly uneven. Seventy-five per cent was located in the developed capitalist countries, principally in North America, western Europe and Japan, which account for only 14% of the world's population.
Of the remaining 25%, 66% was located in the 10 most important "developing" countries — Argentina, Brazil, China, Hong Kong, Malaysia, Mexico, South Korea, Taiwan, Thailand and Singapore.
Foreign direct investment in China has been highly concentrated in eight coastal provinces, plus Beijing. When this is factored in, 91.5% of global foreign direct investment stock is concentrated in areas of the world inhabited by only 28% of its population.
Sixty per cent of international investment flowed between the imperialist "Triad" of North America, western Europe and Japan.
The geographical concentration in foreign direct investment is parallelled by the geographical unevenness of trade: 84% of world trade was between areas of the world inhabited by only 28% of its population.
Marginalisation
The great majority of the countries of the world, inhabited by nearly three-quarters of the world's population, were not only written off the map as far as foreign direct investment was concerned, but are also completely marginalised in world trade. The main way they are "integrated" into the global capitalist economy is through their annual tribute of US$40 billion in debt repayments and servicing to the banks and governments of the imperialist Triad members.
The previous figures demonstrate that it is the imperialist countries that constitute the membership of the "globalised" economy, if such an entity can really be said to exist. The overwhelming majority of transnational corporations still operate only in a small number of countries — principally their "home" country and the other "high wage" countries.
Transnational corporations are not directing their investments toward areas of the world where labour costs are lowest. There is no big push by German transnational corporations, for example, to transfer their capital from manufacturing industries in Germany, where wage levels average $25 per hour, to non-unionised branches of Indian industry, where the average wage is 40 cents an hour.
In fact, the manufacturing foreign direct investment of transnational corporations is increasingly directed toward branches of industry with high levels of spending on fixed capital, smaller but more skilled work forces and thus relatively higher wage levels.
Convergence?
In its 1995 World Development Report, the World Bank warned that "it would be foolish to predict that the differences between rich and poor countries will rapidly disappear through convergence, either upward (of poor countries' wages and living standards toward those in the rich countries) or downward (the reverse)".
"Convergence", the report noted, "is a notion dear to economists, who like its close fit with theory, and abhorred by populists in rich countries, who see it as a threat to their incomes. Past experience, however, supports neither the hopes of the former nor the fears of the latter ... Overall, divergence, not convergence, has been the rule."
The average per capita income of the richest countries was 11 times that of the poorest countries in 1870, rose to 38 times as much in 1965 and 58 times as much in 1985.
The same report matter-of-factly states: "Inequalities between men and women, between ethnic groups, and between geographic regions are particularly tenacious ... Poor regions, such as the state of Chiapas in Mexico, usually stay relatively poor even when the economy as a whole expands".
Internationalisation
There has undoubtedly been a strong tendency toward the internationalisation of capital in recent decades. But it is essential not to confuse the internationalisation of the production and sale of commodities with the internationalisation of the power of command over capital (the international centralisation of capital).
The internationalisation of markets is a tendency inherent in capitalism, but it has developed very differently at different times. Broadly speaking, this internationalisation increased from the early 19th century up to the eve of World War I (exports grew from 3% of world industrial output in 1800 to 33% in 1913). It fell back during the years from 1913 to 1939 and began to climb again in the period after World War II.
Prior to World War II, there was only a marginal internationalisation of production, outside of raw materials.
This began to change after World War II, as large companies based in the developed capitalist countries — in the first instance, US based-companies — started to invest in manufacturing production abroad. Since the 1960s this has become a generalised phenomenon in all the developed capitalist countries, which for the first time created an immediately international framework for the competition of capital.
However, the internationalisation of capital expenditure is not necessarily congruent with the internationalisation of capital ownership, i.e., the fusion of capitals of different nationalities into genuinely multinational corporations, owned by capitalists of different nationalities and in which the power of command is not in the hands of the capitalists of any one nation. Outside of western Europe, there is little evidence that such an international fusion has taken or is taking place.
State power
If there really was a process of international fusion of big capital, we would see a decline in inter-imperialist competition. The differences of economic interest between the capital owners of different nationalities would be declining, and this would be reflected in a decline in the use of imperialist state power to defend the interests of different groups of national capitalists against each other.
Again, there is no evidence of any decline in the role of the imperialist nation-states as weapons of inter-imperialist competition. To the contrary, since the end of the Cold War, we have seen an intensification of the use of imperialist state power, particularly by the US capitalists against their Japanese and west European rivals.
A prime example is the conflict over the Helms-Burton Act. The act was not only aimed at tightening the US economic blockade against the Cuban socialist state. It was drafted by lawyers from the Bacardi company, famous for its (non-Cuban) white rum. The key target for Bacardi was the French company Pernod-Ricard, which had done a major deal with Cuba to provide it with distilled rum for its worldwide marketing operation.
Economic competition between US and west European corporations is also at the root of the D'Amato-Kennedy Act, which threatens US court sanctions against companies investing and trading in the oil business with Iran and Libya.
Rivalry between US and French imperialism was openly manifested during the recent events in Zaire. Washington is no longer willing to allow French capital privileged access to mineral-rich Francophone African countries like Zaire.
The US government used both diplomatic and military power last September to block the French-initiated UN "food for oil" plan with Iraq. A few weeks ago, the US administration allowed the UN plan to be put into operation, but with one change — now the revenue from Iraq's oil sales will not be deposited with a bank in Paris, but with a bank in New York!
Those who argue that transnational corporations have become sovereign colossi overriding the power of the bourgeois nation-state or have become indifferent to the question of national state power, make two fundamental errors.
First, they fail to recognise that as competition between transnational corporations intensifies, these corporations increasingly need the power of a strong state to defend their interests against their competitors.
Secondly, they fail to distinguish between weak, semicolonial bourgeois states and the imperialist states. The colossal economic power of transnational corporations over the former in fact rests on the support they receive from the state power of their "home" base.
But aren't governments "ceding" sovereignty increasingly to "international organisations" like the IMF, the World Bank and the World Trade Organisation that act for the interests of transnational corporations? Here again, we need to distinguish between semicolonial states and imperialist states.
In 1990, the 23 imperialist states had 62.7% of the votes in the IMF. The five permanent directors of the IMF's Executive Board are nominated by the USA, Britain, France, Germany and Japan.
The essential function of the IMF, the World Bank and the WTO is to impose upon the rest of the countries of the world economic policies that are agreed upon among the major imperialist states.
Financial mobility
Perhaps the major argument in support of the globalisation thesis is the enormous amount of money capital involved in international stock, bond and currency transactions. Electronic communications technology means that huge amounts of money can be transferred around the world at a moment's notice.
The combined turnover of the major stock markets in a single day is equivalent to the turnover in international trade in a year. The same is true of transactions on the major currency exchange markets.
But this very fact indicates that more than 90% of these transactions are essentially speculative. The same is true of the large amounts of money capital invested in the world's stock markets.
Since the stock market crash of October 1987, the amount of paper money invested in company shares has risen by over 25% in Italy and Canada, over 50% in the USA, Germany and Britain and over 100% in France. At the end of December 1995, the ratio of US stock prices to dividends was at its highest level since record keeping began in 1871.
Few investors nowadays buy shares for the profits a company generates through its production and sale of commodities. The point is to make a quick profit by predicting the way everybody else will be buying and selling tomorrow, or in five minutes.
The fundamental cause of this bloated speculative system is the enormous excess productive capacity (i.e., actual or potential overproduction of commodities) burdening most industries throughout the world.
Neo-liberalism
If, as has been demonstrated, the arguments in support of the "globalisation" thesis do not stand up to scrutiny, why has this concept become so fashionable? Hirst and Thompson offer the following explanation:
"For the right in the advanced industrial countries the rhetoric of globalization is a godsend. It provides a new lease of life after the disastrous failure of their monetarist and radical individualist policy experiments in the 1980s."
The old arguments for neo-liberal economic policies have lost their credibility. A new argument is being peddled to legitimise these policies: if we, the workers of the developed countries, do not accept more cutbacks in our wages, working conditions and social welfare, then "our" countries will become uncompetitive in the eyes of the now globally mobile forces of big business, which will then shift its investments into the lower-cost economies of the newly industrialising countries.
By the late 1970s, it had become clear to the imperialist rulers that it was no longer possible to assure full employment, maintain social security and grant a steady if modest increase in real income for wage earners without threatening capitalist profits. At that point, the drive to restore the rate of profit through a strong upswing in the rate of exploitation of the working class became the imperialist rulers' top priority.
Without restoration of a chronic structural unemployment, without severe cutbacks in social security and other components of the socialised portion of wages and without generalised austerity, there can be no restoration of the rate of profit in productive investment.
Rise of resistance
Beginning with strike of public transport and postal workers in France in December 1995, there has been a new rise of working-class combativity in a series of industrial and semi-industrialised countries.
Subsequent actions against the capitalist offensive include:
la one-day strike by 1.6 million French public sector workers on October 16 in protest against proposals to freeze public sector salaries and cut jobs;
l300,000 people marching through Brussels in protest against suspected protection by Belgian politicians of a paedophile ring, and a 24-hour general strike to demand the introduction of a shorter work week with no reduction in pay, both in October;
l a strike on October 24 by 400,000 steelworkers, shipbuilders and other manufacturing industry workers in Germany against cuts in sick pay;
la city-wide general strike in Toronto, Canada's largest city, on October 25 to protest cuts to welfare, education and health care by the provincial government;
ldemonstrations and strikes by 1.5 million German metalworkers in the state of Bavaria on November 1 to protest austerity measures by the federal government;
l3 million workers participating in a general strike in Greece on November 28, while thousands of farmers set up roadblocks, demanding higher prices for their products, cheaper fuel, rescheduling of debts to banks and lower taxes on farm machinery;
la 24-hour strike in all the major cities of Italy on December 13, in protest at the austerity measures of the newly elected government.
Perhaps the most significant of all these labour actions was the strike by 50,000 French truck drivers that began on November 17 and ended 12 days later. The truck drivers won their central demands — for shorter working hours without loss of pay and reduction of the retirement age from 60 to 55.
Key to the truck drivers' victory was the mass solidarity they received from other French workers.
Especially disturbing to the capitalist rulers is that what started out in France at the end of 1995 as a well-fought defensive struggle by workers has led to a struggle with a clearly offensive character. As the bourgeois social and ideological assault loses its credibility and workers begin to wage successful defensive battles, they will soon recover the confidence to mount a determined counter-offensive.
Through militant mass action and class-struggle solidarity, our class can not only block the capitalists' assault on our living standards but also force them to into retreat. That is a concept that is truly worthy of globalisation.
[This is an abridged version of a report to the Democratic Socialist Party national conference, held January 3-8.]