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This is an extract from a paper given to the Socialist Scholars’ Conference in New York on September 11, 1966. The full text has been published in Monthly Review.

One of the reasons frequently given for believing that economic imperialism is an unimportant influence in foreign and military policy is that only a small segment of American business is vitally concerned with foreign or military activities. This might be a meaningful observation if economic resources were widely distributed and the majority of domestic-minded business firms could conceivably be mobilized against policies fostered by the small minority of foreign-oriented businesses. But the realities of economic concentration suggest quite the opposite. In manufacturing industries, 5 corporations own over 15 percent of total net capital assets (as of 1962). The 100 largest corporations own 55 percent of total net capital assets.1This means that a small number of firms – with their own strength and that of their allies in finance and mass communication media – can wield an overwhelming amount of economic and political power, especially if there is a community of interest within this relatively small group.

And it is precisely among the giant corporations that we find the main centres of foreign and military economic operations. Just a cursory examination of the 50 largest industrial concerns shows the following types of firms heavily involved in international economic operations and the supply of military goods: 12 in oil, 5 in aviation, 3 in chemicals, 3 in steel, 3 in autos, 8 in electrical equipment and electronics, and 3 in rubber. These 37 companies account for over 90 percent of the assets of the top 59 industrial firms.

The community of interest among the industrial giants in foreign and military operations stems from relations that are not always obvious in terms of the customary statistical categories. First, there is the interrelationship among the firms via the financial centres of power. Second, there are the direct economic ties of business. While only five firms get one-fourth of the volume of military contracts and 25 firms account for more than half of such contracts, a large part of this business is distributed to other businesses that supply these chief contractors.2 Thus, the primary nonferrous metal manufacturers who receive very few direct military contracts nevertheless get over 22 percent of their business from military demand. And, third, because of the rich growth potential and other advantages of the military and foreign-oriented businesses, the post-war merger movement among industrial giants has inter-mingled the typically domestic with the typical outer-market directed business organizations. The most unlikely-seeming business organizations are today planted with both feet in foreign and military business. We see, for example, traditional producers of grain mill products and of plumbing and heating equipment acquiring plants that make scientific instruments; meat packing firms buying up companies in the general industrial machinery field, and many other cross-industry mergers.

TABLE 1

U.S. Direct Foreign Investment by Size of Investment (1957)

Value of Direct Investment No. of Firms Percent of Total
by Size Classes U.S. Investment
   $100 million and over …. 45 57
$50-100 million …. …. 51 14
$25-50 million …. …. 67 9
$10-25 million …. …. 126 8
$5-10 million …. …. 166 5
TOTAL …. ….. 455 93

Source: United States Business Investments in Foreign Countries , U.S. Department of Commerce, 1960 p. 144