A Dialog on the Divisions Among Multinational Banks and Corporations

Dear Monitor,

Your article on divergent transnational corporation (TNC) positions toward the proposed World Bank energy affiliate is an excellent case study of divisions within U.S. ruling echelons. The split must, however, be viewed as a larger (not often clearly defined) division among corporate interests over the best strategies to pursue towards their common ends of maximizing profit and perpetuating the world capitalist economy.

Traditionally, the tensions between domestic-oriented and transnational capital have been viewed as the major division in the corporate world. You have suggested a split principally between transnational banks (TNBs) and TNCs. We think however, that the more significant demarcation lies within the ranks of TNCs.

A first group you have rightly identified as the "trilateralists" on the rise in the post-Vietnam years, on the decline since Reagan's election. They stand behind economic means and strategies to maximize "interdependence," an interdependence which holds the promise of maximizing trade and investment opportunities for TNCs. The trilateralist blueprint for "free trade" includes socialist countries in the belief that fostering dependence on the global capitalist economy provides the best means for coopting and controlling socialism. Transnational banks, the World Bank/ IMF group, and a number of TNCs make up these trilateralist ranks.

On various issues, the trilateralists' position is consistent: they voice solid support for multilateral aid, expanded IMF/ World Bank roles, detente, the Law of the Sea, etc. Overall, they view institutions like the World Bank as effective mechanisms to serve U.S. economic and security interests. On the specific issue of the World Bank energy affiliate, there is some dissension in the trilateralist ranks. The World Bank, transnational banks (reflected in the Journal of Commerce) and some TNCs are squarely behind the energy affiliate. This is in good part because they have identified costly oil imports as the most dangerous ingredient of the explosive $400 billion third world debt, owed mainly to transnational banks. In this case, however, the oil companies espouse an anti-energy affiliate (and therefore, anti-trilateral) position for reasons of narrower self-interest. But, by and large, oil executives hold a trilateralist worldview.

The significant split among TNCs is between the trilateralists and a second group who might be labelled "Wall Street Journalists" (as that newspaper most consistently represents their interests). These are transnational corporate executives who see the necessity of combining strategic and economic means towards the same transnational capitalist ends. Fanatically anti-communist, they cling to a free trade doctrine which excludes dealings with socialist countries. Their greatest fear is of an expanding socialist world, chipping away at the global capitalist economy. In all this, as well as in their more strategic (militaristic) view of how revolutionary change in the third world is best contained, the "Wall Street Journalists" have a friend in Reagan.

Under the banner of "protecting the free world," the Wall Street Journalists push a policy package which sets them at odds with the trilateralist rallying cry of "interdependence." Harking back to the cold war days, they favor rewarding "authoritarian" allies with bilateral aid, limiting the World Bank/IMF to narrow disciplinary roles, getting tough with the Soviet Union, and discarding international initiatives like the Law of the Sea. They share these "conservative" positions with many smaller-scale domestic entrepreneurs (albeit for different reasons) who are, however, pro-protectionism.

What is confusing to many is that both trilateralists and Wall Street Journalists come from similar ranks within the TNCs. The ends they seek-the strengthening and perpetuation of the global capitalist economy-are, therefore, similar; they are pitted against each other only in terms of strategies and priorities. The groups change in relative and absolute strength as the global economic and political situation changes. In the wake of America's Vietnam debacle, for instance, Robert McNamara and others came to see the role state institutions (like the World Bank) play in a trilateralist sense. Now, as the Sino-Soviet split becomes more strategically important, and as liberated countries grow in numbers, more TNC voices are heard in favor of the narrower political-military solutions (versus trilateralists' "economic restructuring') and a tough stance on who is aided and how.

As TNCS grow and as the global economic crisis escalates, these divisions must be analyzed, and the debate on the left extended.

- Robin Broad
Princeton University
John Cavanagh
United Nations

Multinational Monitor welcomes the opportunity to clarify the issues raised by Ms. Broad and Mr. Cavanagh. We urge readers to use our letters column as a forum for discussion.

The writers argue that we have misidentified the split "within U.S. ruling echelons," placing too much emphasis on the division between transnational banks and multinational companies, and not enough emphasis on the division "within the ranks" of multinational companies. We may have neglected to draw out some of the tensions among corporations, but not for the reason suggested.

We know of no significant instances of multinational corporations or banks being motivated by considerations such as "fanatic anti-communism." Companies and banks operate according to the profit motive.

Exxon, Occidental Petroleum, Marathon Oil, Conoco and Amerada Hess have dealings with Libya; Gulf, Texaco, Boeing and General Electric have contracts with Angola: Caterpillar Tractor and Westinghouse do business with the Soviet Union. These companies pursue economic relations with socialist countries not because of their corporate executives' attitudes towards communism, but because their executives recognize a chance to make a buck when they see one.

In examining conflicting interests among multinational firms and banks, we find it useful to consider three principal roles these corporations play in relation to third world countries: they may be bankers, marketers, or extractors of resources, including labor.

Banks, worried about the ability of less developed countries to repay their loans, advocate strengthening third world economies and they thus support bilateral and multilateral aid as a means of ensuring that their debtors have the money to meet their repayment schedules.

To maximize their profits, extractors are likely to promote policies which keep third world countries poor. The more desperate a country is for foreign exchange, the more favorable are the terms it is likely to grant an extractor company.

By contrast, it is clearly in the marketers' interests that the billions of people in developing countries have the purchasing power to buy their products.

In our article on the World Bank energy affiliate, we were making the point that the oil companies were acting as extractors, and were thus at odds with multinational bankers.

- MR. R. & P. F.