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The World Managers

The men who run the global corporations are the first in history
with the organization, technology, money, and ideology to make
a credible try at managing the world as an integrated unit. The
global visionary of earlier days was either a self-deceiver or a
mystic. When Alexander the Great wept by the riverbank because
there were no more worlds to conquer, his distress rested on
nothing more substantial than the ignorance of his mapmaker.
As the boundaries of the known world expanded, a succession of
kings, generals, and assorted strong men tried to establish
empires
of ever more colossal scale, but none succeeded in making a last
ing public reality out of private fantasies. The Napoleonic
system,
Hitler's Thousand Year Reich, the British Empire, and the Pax
Americana left their traces, but none managed to create anything
approaching a global organization for administering the planet
that could last even a generation. The world, it seems, cannot be
run by military occupation, though the dream persists.

The managers of the world's corporate giants proclaim their


faith that where conquest has failed, business can succeed. "In
the
forties Wendell Willkie spoke about 'One World,''' says IBM's
Jacques G. Maisonrouge. "In the seventies we are inexorably
pushed toward it." Aurelio Peccei, a director of Fiat and orga
nizer of the Club of Rome, states flatly that the global corpora
tion "is the most powerful agent for the internationalization of
human society." "Working through great corporations that strad
dle the earth," says George Ball, former Under Secretary of State
and chairman of Lehman Brothers International, "men are able
for the first time to utilize world resources with an efficiency
dic
tated by the objective logic of profit." The global corporation
is
ushering in a genuine world economy, or what business consul
tant Peter Drucker calls a "global shopping center," and it is
accomplishing this, according to Jacques Maisonrouge, "simply
by doing its 'thing,' by doing what came naturally in the pursuit
of its legitimate business objectives."

The global corporation is the first institution in human history


dedicated to centralized planning on a world scale. Because its
primary purpose is to organize and to integrate economic activity
around the world in such a way as to maximize global profit, the
global corporation is an organic structure in which each part is
expected to serve the whole. Thus in the end it measures its suc
cesses and its failures not by the balance sheet of an individual
subsidiary, or the suitability of particular products, or its
social
impact in a particular country, but by the growth in global
profits
and global market shares. Its fundamental assumption is that the
growth of the whole enhances the welfare of all the parts. Its
fundamental claim is efficiency.

Under the threat of intercontinental rocketry and the global


ecological crisis that hangs over all air-breathing creatures,
the
logic of global planning has become irresistible. Our generation,
the first to discover that the resources of the planet may not
last
forever, has a particular reverence for efficiency. The global
cor
porations, as Maisonrouge puts it, make possible the "use of
world resources with a maximum of efficiency and a minimum of
waste ... on a global scale." Rising out of the post-World War IT
technological explosion which has transformed man's view of
time, space, and scale, global corporations are making a bid for
political acceptance beyond anything ever before accorded a busi
ness organization. The first entrepreneurial class with the prac
tical potential to operate a planetary enterprise now aspires to
become global managers.

"For business purposes," says the president of the IBM World


Trade Corporation, "the boundaries that separate one nation
from another are no more real than the equator. They are merely
convenient demarcations of ethnic, linguistic, and cultural enti
ties. They do not define business requirements or consumer
trends.
Once management understands and accepts this world economy,
its view of the marketplace-and its planning-necessarily ex-
pand. The world outside the home country is no longer viewed as
series of disconnected customers and prospects for its products,
but as an extension of a single market."

The rise of the planetary enterprise is producing an organiza


tional revolution as profound in its implications for modern man
as the Industrial Revolution and the rise of the nation-state
itself.
The growth rate of global corporations in recent years is so
spec
tacular that it is now easy to assemble an array of dazzling
statis
tics. If we compare the annual sales of corporations with the
gross national product of countries for 1973, we discover that
GM is bigger than Switzerland, Pakistan, and South Africa; that
Royal Dutch Shell is bigger than Iran, Venezuela, and Turkey;
and that Goodyear Tire is bigger than Saudi Arabia. The average
growth rate of the most successful global corporations is two to
three times that of most advanced industrial countries, including
the United States. It is estimated that global corporations
already
have more than $200 billion in physical assets under their con
trol. But size is only one component of power. In international
affairs Mao's dictum that political power grows out of the barrel
of a gun shocks no one. To those who question their power, cor
porate statesmen like to point out that, like the Pope, they have
no divisions at their command. The sources of their extraordinary
power are to be found elsewhere-the power to transform the
world political economy and in so doing transform the his
toric role of the nation-state. This power comes not from the
barrel of a gun but from control of the means of creating wealth
on a worldwide scale. In the process of developing a new world,
the managers of firms like GM, IBM, Pepsico, GE, Pfizer, Shell,
Volkswagen, Exxon, and a few hundred others are making daily
business decisions which have more impact than those of most
sovereign governments on where people live; what work, if any,
they will do; what they will eat, drink, and wear; what sorts of
knowledge schools and universities will encourage; and what
kind of society their children will inherit.

Indeed, the most revolutionary aspect of the planetary enter


prise is not its size but its worldview. The managers of the
global
corporations are seeking to put into practice a theory of human
organization that will profoundly alter the nation-state system
around which society has been organized for over 400 years.
What they are demanding in essence is the right to transcend the
nation-state, and in the process, to transform it. "I have long
dreamed of buying an island owned by no nation," says Carl A.
Gerstacker, chairman of the Dow Chemical Company, "and of
establishing the World Headquarters of the Dow company on the
truly neutral ground of such an island, beholden to no nation or
society. If we were located on such truly neutral ground we could
then really operate in the United States as U.S. citizens, in
Japan
as Japanese citizens and in Brazil as Brazilians rather than
being
governed in prime by the laws of the United States .... We could
even pay any natives handsomely to move elsewhere."

A company spokesman for a principal competitor of Dow,


Union Carbide, agrees: "It is not proper for an international
cor
poration to put the welfare of any country in which it does busi
ness above that of any other." As Charles P. Kindleberger, one of
the leading U.S. authorities on international economics, puts it,
"The international corporation has no country to which it owes
more loyalty than any other, nor any country where it feels com
pletely at home." The global interests of the world company are,
as the British financial writer and Member of Parliament Christo
pher Tugendhat has pointed out, separate and distinct from the
interests of every government, including its own government of
origin. Although, in terms of management and ownership, all
global corporations are either American, British, Dutch, German,
French, Swiss, Italian, Canadian, Swedish, or Japanese (most, of
course, are American), in outlook and loyalty they are becoming
companies without a country.

It is not hard to understand, however, why American corporate


giants, even those whose presidents must still make do with an
office in a Park A venue skyscraper instead of a Pacific island,
feel that they have outgrown the American Dream. The top 298
U.S.-based global corporations studied by the Department of
Commerce earn 40 percent of their entire net profits outside the
United States. A 1972 study by Business International Corpora
tion, a service organization for global corporations, shows that
122 of the top U.S.-based multinational corporations had a higher
rate of profits from abroad than from domestic operations. In the
office-equipment field, for example, the overseas profit for 1971
was 25.6 percent, compared with domestic profits of 9.2 percent.
The average reported profit of the pharmaceutical industry from
foreign operations was 22.4 percent as against 15.5 percent from
operations in the United States. The food industry reported
profits
from overseas of 16.7 percent as compared with U.S. profits of
11.5 percent. (Extraordinarily high profit on relatively low
over
seas investment is not uncommon. In 1972, for example, United
Brands reported a 72.1 percent return on net assets, Parker Pen
51.2 percent, Exxon 52.5 percent.) By 1973, America's seven
largest banks were obtaining 40 percent of their total profits
from
abroad, up from 23 percent in 1971.

Department of Commerce surveys show that dependence of


the leading U.S.-based corporations on foreign profits has been
growing at an accelerating rate since 1964. In the last ten years
it has been substantially easier to make profits abroad than in
the
U.S. economy. The result has been that U.S. corporations have
been shifting more and more of their total assets abroad: about
one-third of the total assets of the chemical industry, about 40
percent of the total assets of the consumer-goods industry, about
75 percent of those of the electrical industry, about one-third
of
the assets of the pharmaceutical industry are now located outside
the United States. Of the more than $100 billion invested world
wide by the U.S. petroleum industry, roughly half is to be found
beyond American shores. Over 30 percent of U.S. imports and
exports are bought and sold by 187 U.S.-based multinational
corporations through their foreign subsidiaries. It is estimated
by
the British financial analyst Hugh Stephenson that by the mid-
1970's, 90 percent of overseas sales of U.S.-based corporations
"will be manufactured abroad by American-owned and controlled
subsidiaries." "Investment abroad is investment in America" is
the new slogan of the global corporations.

The popular term for the planetary enterprise is "multinational


corporation." In this book we shall seek to avoid it, because it
suggests a degree of internationalization of management, to say
nothing of stock ownership, which is not accurate. A study of the
1,851 top managers of the leading U.S. companies with large
overseas payrolls and foreign sales conducted a few years ago by
Kenneth Simmonds reveals that only 1.6 percent of these high
level executives were non-Americans. It is well known that non
Americans hold no more than insignificant amounts of the stock
of these enterprises.

More important, the term is inadequate because it fails to cap


ture that aspect of the contemporary world business which is
most revolutionary. Businessmen have been venturing abroad a
long time-at least since the Phoenicians started selling glass to
their Mediterranean neighbors. Some of the great trading com
panies like the sixteenth-century British Company of Merchants
Adventurers antedated the modern nation-state. Each of the great
nineteenth-century empires-the British, the French, the Dutch,
and even the Danish-served as a protector for private trading
organizations which roamed the earth looking for the markets
and raw-material sources on which the unprecedented comforts
of the Victorian Age depended. Nor could it be said that doing
business abroad is a new departure for Americans. At the turn
of the century, American firms, such as the Singer Sewing Ma
chine Company, were already playing such an important role in
the British economy that the book The American Invaders was
assured an apoplectic reception in the City when a London pub
lisher brought it out in 1902. Ford has had an assembly plant in
Europe since 1911, and the great oil companies have been oper
ating on a near-global scale since the early days of the century.

What makes the global corporation unique is that unlike cor


porations of even a few years ago, it no longer views overseas
factories and markets as adjuncts to its home operations.
Instead,
as Maisonrouge puts it, the global corporation views the world
as "one economic unit." Basic to this view, he points out, "is a
need to plan, organize, and manage on a global scale." It is this
holistic vision of the earth, in comparison with which "interna
tionalism" seems parochial indeed, that sets the men who have
designed the planetary corporation apart from the generations of
traders and international entrepreneurs who preceded them.

The power of the global corporation derives from its unique


capacity to use finance, technology, and advanced marketing
skills to integrate production on a worldwide scale and thus to
realize the ancient capitalist dream of One Great Market. This
cosmopolitan vision stands as a direct challenge to traditional
nationalism. Indeed, the world's leading corporate managers now
see the nation-state, once the midwife of the Industrial Revolu
tion, as the chief obstacle to planetary development. "The
politi
cal boundaries of nation-states," declares William I. Spencer,
president of the First National City Corporation, which does
busi-
ness in 90 countries, "are too narrow and constricted to define
the scope and sweep of modern business." For George Ball the
world corporation "is planning and acting well in advance of the
world's political ideas" because it is "a modern concept,
designed
to meet modern requirements." The nation-state, unfortunately,
"is a very old-fashioned idea and badly adapted to our present
complex world." A true world economy, says John J. Powers,
president of Pfizer, echoing Ball, "is no idealistic pipe dream
but
a hard-headed prediction: it is a role into which we are being
pushed by the imperatives of our own technology." Even more
blunt an attack on the nation-state comes from Maisonrouge of
IBM. "The world's political structures are completely obsolete.
They have not changed in at least a hundred years and are woe
fully out of tune with technological progress." The "critical
issue
of our time," says Maisonrouge, is the "conceptual conflict be
tween the search for global optimization of resources and the
independence of nation-states." Business International warns its
corporate clients in a 1967 Research Report: " ... the nation
state is becoming obsolete: tomorrow ... it will in any meaning
ful sense be dead-and so will the corporation that remains
essentially national."

A little more than a generation after the withering of the


wartime dream of world brotherhood-"Globaloney," in Clare
Boothe Luce's epitaph for Wendell Willkie's "One World"-a
new breed of globalists have launched an attack on the nation
state more radical than anything proposed by World Federalists,
U.N. enthusiasts, or other apostles of "woolly-headed
internation
alism" who traditionally cause dismay in boardrooms and country
clubs. The men who run the global corporations, aware that
ideologies, like crackers, travel well only if skillfully
packaged,
are putting great energy into marketing a new gospel of peace
and plenty, which has more potential to change the face of the
earth than even the merchandising miracles that have brought
Holiday Inns and Pepsi-Cola bottling plants to Moscow and
PolIo Frito Kentucky to Latin America. Jacques Maisonrouge
likes to point out that "Down with Borders," a revolutionary
student slogan of the 1968 Paris university uprising-in which
some of his children were involved-is also a welcome slogan at
IBM.

The new generation of planetary visionaries, unlike globalists


of earlier days, come to their prophetic calling not by way of
poetic imagination, transcendental philosophy, or Oriental mys
ticism but by solid careers in electrical circuitry, soap, mayon
naise, and aspirin. But they proclaim the heavenly city of the
global corporation with the zeal of a Savonarola. For Roy Ash,
the former head of Litton Industries, later Nixon's budget direc
tor and chief consultant in managerial matters, the world corpo
ration represents a "transcendental unity." It is the wave of the
future, "for nothing can stop an idea whose time has come." Men
like Ash know that their vision of a world without borders is the
most important product they have to sell, for the extraordinary
role they are proposing to play in human affairs challenges what
Arnold Toynbee calls "mankind's major religion, the cult of sov
ereignty." What we need, Pfizer's president, John J. Powers, told
a business gathering some years ago, is "philosophers in action"
to explain "the promise of the world corporation." David Rocke
feller, chairman of the Chase Manhattan Bank, calls for a massive
public relations campaign to dispel the dangerous "suspicions"
about the corporate giants that lurk in minds not yet able to
grasp
an idea whose time has come.

The rhapsodic tone which the new globalists have developed


in their celebration of the global corporation as "the instrument
of
world development," "the only force for peace," "the most power
ful agent for the internationalization of human society," or, in
the
words of Dean Courtney Brown of the Columbia Business School,
the "prologue to a new world symphony" is no doubt attributable
in part to the salesman's traditional weakness for puffing. But
more important.: the hard sell of the global corporation, now
being promoted in hundreds of industry speeches and industry
sponsored studies and by elaborate lobbying activities, such as
that of the Emergency Committee for American Trade, reflects
deep and growing customer resistance on many levels.

The managers of the global corporations keep telling one


another that there can be no integrated world economy without
radical transformations in the "obsolete" nation-state; but how
ever progressive a notion this may be, those who depend on the
old-fashioned structures for their careers, livelihood, or
inspira
tion are not easily convinced. The executives who run the global
corporations have persuaded themselves that they are far ahead
of politicians in global planning because political managers are
prisoners of geography. As much as the mayor of Minneapolis or
Milan or Sao Paulo may aspire to a planetary vision, his career
depends upon what happens within his territorial domain. Rulers
of nations exhibit a similar parochialism for the same reasons.
They are jealous of their sovereign prerogatives and do not wish
to share, much less abdicate, decision-making power over what
happens within their territory.

The new globalists are well aware of the problem. "Corpora


tions that buy, sell, and produce abroad," says George Ball, "do
have the power to affect the lives of people and nations in a
man
ner that necessarily challenges the prerogatives and
responsibili
ties of political authority. How can a national government make
an economic plan with any confidence if a board of directors
meeting 5,000 miles away can by altering its pattern of purchas
ing and production affect in a major way the country's economic
life?" But the World Manager's answer to the charge of being a
political usurper is not to deny the extraordinary power he seeks
to exercise in human affairs but to rationalize it.

David Rockefeller has called for a "crusade for understanding"


to explain why global corporations should have freer rein to move
goods, capital, and technology around the world without the
interference of nation-states; but such a crusade calls for the
public relations campaign of the century. Perhaps the logic of
One World has never been so apparent to so many, yet the twen
tieth century is above all the age of nationalism. There has been
no idea in history for which greater numbers of human beings
have died, and most of the corpses have been added to the heap
in this century. The continuing struggle for national identity is
the
unifying political theme of our time. The imperial architects of
Germany, Italy, and Japan; the guerrilla leaders of liberation
movements, Tito, Ho, Castro; and those who are still fighting to
free Africa from colonial rule have all been sustained by the
power of nationalism. "The nation-state will not wither away,"
the chairman of Unilever, one of the earliest and largest world
corporations, predicts. A "positive role" will have to be found
for it.

Any enterprise with a planetary appetite is bound to gather a


global collection of enemies. Basically, they fall into three
dis-
tinct groups. The first includes those whose economic interests
are adversely affected by the rise of the world corporation. In
the
United States the most seriously damaged member of this group
is organized labor. To the UA Wand the AFL-CIO the "prologue
to a new world symphony" looks like nothing more than an up
dated version of the "runaway shop." Singer Sewing Machine,
one of the earliest international companies, has in recent years
reduced its main U.S. plant in New Jersey from 10,000 employees
to 2,000. General Instruments recently cut its New England
labor force by 3,000 and increased its force in Taiwan 'by almost
5,000. This process shows no sign of stopping. The global cor
porations claim that the effect of internationalization of
produc
tion is a net increase in jobs, because the stimulation of new
in
dustry is greater than the job displacement in older industry. We
shall look at this question of job displacement in detail in Part
III;
but whether one reads union studies or industry studies, the fact
is indisputable that thousands of U.S. workers are losing jobs
because of plant relocation. That other workers in other places
may be getting jobs in the process is small comfort to the unem
ployed.

The discomfort is sufficiently acute that organized labor has


mounted a campaign to pass frankly punitive legislation designed
to discourage foreign investment, principally the Hartke-Burke
bill. Organized labor is hostile to the world corporation not
only
because it employs cheap labor under what can only be described
as sweatshop conditions (60 percent of the male workers of Hong
Kong work seven days a week for about a dollar a day), but also
because the mobility of the global enterprise robs labor of its
traditional bargaining weapons. (Companies now deliberately
duplicate production facilities so that they can shift from one
to
another in the event of labor trouble.)

Some older domestic industries in the United States such as


shoes and textiles continue to fight the world without borders
because they are dependent upon such borders to protect them
from devastating foreign competition. The motto of the growing
band of neoprotectioriists is "Up with Borders"-the opposite of
the one that may unite revolutionary students and IBM execu
tives. In poor countries, national industries threatened with
either
absorption by the global giants or lethal competition also form
part of the protectionist coalition.

But the torrent of articles, exposes, and impassioned speeches


on the global companies, particularly in the underdeveloped coun
tries, is a reflection of a second group of enemies, who are
moti
vated as much by political feelings as by economic interest. The
disclosures of ITT's efforts to bring down the Allende government
in Chile have confirmed widespread fears that the global corpora
tions not only have too much power but that they abuse that
power. There is increasing concern around the world that global
corporations are in a position to dominate governments, dislocate
national economies, and upset world currency flows. Corporate
managers have such power to shift capital, develop (or suppress)
technology, and mold public moods and appetites that even the
most powerful governments worry about their ability to con
trol them. Whether the global corporation should be welcomed,
barred, or fitted with a legal straitjacket is shaping up as a
prime
political issue in virtually all developing countries and
increas
ingly in the more industrialized nations as well.

Potential members of the second group include officials and


bureaucrats in the largest developed countries who are beginning
to see the worldwide corporate attack on "irrational nationalism"
as a direct challenge to their own power. It is one thing to be
against "irrational nationalism" in Guatemala, where what is
presumably meant is expropriation of bananas. It is something
else again when U.S. officials themselves become the target. Al
though the U.S. Government has yet to focus on the challenge
which the power of the global corporation poses to its own power
(in such policy areas as anti-trust, taxation, pollution control,
and
energy, for example), there are even now a few hints of
irritation
from government bureaucrats over the high-handedness of the
corporate giants. The series of governmental investigations of
the
global corporations around the world, by the U.S. Senate Foreign
Relations and Finance committees, the European Economic
Community, the United Nations, the Canadian and Swedish
governments, among others, attests to the growing fears of poli
ticians that in a world without borders dominated by global
corporations they may lose the capacity to govern. The Council
of the Americas, a mutual-support association of the 200 princi
pal U.S.-based corporations operating in Latin America, devoted
its 1972 annual meeting to the theme of anticorporatism and
how business must "explain itself' better. A similar concern
dominated the 1972 White House Conference on the Industrial
World Ahead 1990. David Rockefeller shocked bankers at the
Detroit Economic Club by pointing out that, according to a re
cent poll, three out of five students believe that "big business
has
taken the reins of government away from the Congress and Ad
ministration." Rockefeller's poll is corroborated by a University
of Michigan survey which reveals that 59 percent of all Americans
think that "the Government is run by a few big interests looking
out for themselves." Opinion Research Corporation reports that
"53 % of the people feel business is doing very little in
pollution
control while only 10% think it is doing a great deal."
The attitude of young people around the world toward the
global corporation is a cause of particular concern. "If 1 were
asked to describe the current stereotype of the corporation held
by the young," says Jacques Maisonrouge in a speech he has
delivered on more than one occasion, "I would be compelled to
say:

A corporation is a business structure whose sole reason for


existence is the earning of profits by manufacturing products for
as little as possible and selling them for as much as possible.
It
does not matter whether the product does good or evil; what
counts is that it be consumed-in ever-increasing quantities.
Since everything the corporation does has, as its ultimate goal,
the creation of profit, it offers its workers no deep personal
sat
isfactions, no feeling of contributing anything worthwhile to
society, no true meaning to their activities. Go to work for a
corporation and you are, through good salaries and various
fringe benefits, installed as a faceless link in the lengthening
chain--completing the circle by becoming one more consumer
of all that junk. And, like all circles, the whole structure
signifies
nothing.

"America's Growing Anti-Business Mood," as Business Week


calls it, threatens what the World Managers seek above all:
public
acceptance of the global corporation as the most effective and
rational force to develop and distribute the resources of the
world.
In short, political legitimacy.

The confrontation between the multinational corporation and


its enemies promises to influence the shape of human society in
the last third of the century more than any other political drama
of our time. To survive and to grow, certainly to fulfill its
prom
ise to create a rational, integrated world economy, the global
corporation must forge a new global consensus on the most fun
damental questions of political life: What kind of social and
economic development meets the needs of twentieth-century
man? What is a just social order? What is "freedom," "justice,"
or "need" in a world in which 4 billion inhabitants are
struggling
for food, water, and air? What does "efficiency" or "growth" or
"rationality" mean in such a world?

And in the end they must answer the 1970's version of the
same question that has confronted every new elite aspiring to
political leadership and social management: by what right do a
self-selected group of druggists, biscuit makers, and computer
designers become the architects of the new world? To establish
their political legitimacy, the aspiring World Managers must be
able to demonstrate that the maximization of global profits is
compatible with human survival.

For more than three years we have been trying to answer these
questions for ourselves. We have examined the claims of the
World Managers in their writings, in their own commissioned
studies, and in numerous personal interviews with some of the
leading corporate executives in the United States and Europe.
We have also looked closely at the case against them. We have
benefited from the explosion of academic analysis on what has,
lately, become a fashionable topic of university study. We 'have
studied both their financial, political, and diplomatic
operations
and some of their plans for our collective future.

Our conclusions about the impact of global corporations are


based on what they do rather than on what they say. In this book
we try to assess what their current operations and future plans
mean in the daily lives of ourselves and our children-not only
in the United States but in the rest of the world. Does the rise
of
the World Managers offer a new golden age or a new form of
imperial domination? Is the global corporation mankind's best
hope for producing and distributing the riches of the earth, as
the
World Managers contend-or, as their critics argue, is their
vaunted rational integrated world economy a recipe for a new
stage in authoritarian politics, an international class war of
huge
proportions, and, ultimately, ecological suicide?