New Corporations

It is instructive to refer to another statement concerning foreign operations of some American corporations. In contrast to the previous statement, the data pertain to 32 overseas trading corporations affiliated with 21 lending United States manufacturers of which only two were incorporated before 1950. Tn the, other 30 subsidiaries 96 per cent of investment was made since 1954.

The sum total of equity investments from the United States of all 32 foreign subsidiaries from date of incorporation to 1960 was $10.5 million. Over the same period, the parent companies received in royalties and fees, alone, the sum of $l8.7 million. Further, the subsidiaries purchased from the United States $258 million worth of commodities. All of these purchases assisted the profitability of American business; those which were made from the parent company, obviously contributed directly to the profitability of the corporation which had undertaken the investment. Over the ten-year period the initial capital investments from the United States came to only $10.5 million. But this had generated sufficient business £or the foreign subsidiaries to increase their assets by a further $24 million through re-investment of undistributed profits and local borrowings.

Although dividends paid by these 32 overseas trading companies in ten years were only $279,000 the profits on the exports of the parent companies and the charging of fees and royalties, would have justified the investments.

Hinterland countries which borrow commercially from the U.S. capital market and pay the interest charges – as well as the American tax payer who finances U.S. aid programmes are assisting the expansion of the sales of U.S. corporations.

It should be pointed out, however, that these corporations would not be able to sell all their exports abroad, were it not for the funds made available to the rest of the world by way of private portfolio long term lending and United States government spending. In this regard, there is here a similarity with conditions in the old world economy by which long-term fixed interest lending supplied the funds to finance the purchaser of the exports of the metropolitan countries. The difference lies in the fact that by means of direct investment American corporations supply the expanding world market from production facilities located all over the world. In this way, they gain a competitive advantage enterprises in the countries in which they establish themselves. The rise of incomes they create expands the market for their sales and increases profits from which they can finance further expansion. The logic of competition drives them to make the world their domain.

The new mercantilism knows no national boundaries. If there were no political barriers in the form of restrictions on imports and national currencies the corporations would still locate their manufacturing production facilities abroad.

“The companies actually producing abroad gave the impression that the prospect of a differential profit rate has little to do with investment programme, but that the protection of competitive position in a market (organic earning capacity) is fundamental. In the almost universal judgement of producers, maintaining competitive position requires continuing investment. Growth is considered indistinguishable from the earning ability ‘to stand still is to lose’.”

“The political boundaries between markets … have no inherent significance for producers in their role of responding to demand. Ex­pansion to serve foreign markets is, in principle, not different from ex­pansion to meet domestic regional or national demand possibilities and may actually present itself to producers u a necessity of maintaining their existing competitive Position. Were there no obstacles to their exports, competitive considerations leading to expanding marketing would in time, require greater production and therefore more investment abroad.”

It has been said that the old colonialism brought the bible and took the land. It imposed Christianity and carried off the wealth of the Indies, the Americas and Africa.

The new colonialism of American expansion is carried by the ideology of materialism, liberalism and anti-nationalism. By means of those values it seeks to disarm the resistance of national communities to alien consumption patterns, and the presence of alien power.

If the nation state is a barrier to the efficient production of material goods by international corporations then, in this liberal view, the nation state is regressive reactionary and obsolete.

It should be food for thought to the liberal that this view coincides so snugly with that of the great corporations. We draw attention to a recent remark made by united States Under-Secretary for State, Mr. George Ball, to the U.S. Chamber of Commerce:

“The multi-national corporation is ahead of, and in conflict with existing political organizations represented by the nation states. Major obstacles to the multinational corporation are evident in Western Europe and Canada, and a good part of the developing world .”

Resistance to the assumption that the quality of life is undoubtedly improved by the mass consumption of American-type consumer goods, and to the consequent conclusion that national and cultural barriers which net to reduce the efficiency with which these goods can be supplied should be swept away, arouses the deepest indignation of American liberals. What else can explain the resentment which General de Gaulle stirs in the liberal soul when he asserts, admittedly when it suits him, the supremacy of national and cultural sovereignty over political and economic integration?

How can American corporate capitalism be assured that the values which serve their interests can be made to prevail all over the “free” world? To ask the question is to answer it cannot. The attempt to do so, however, has been great and costly. In this effort lies the basis of cooperation between big business and the Government of the United States.