Scribd Logo
Upload

Welcome to Scribd!

  • Scott, J. (1997) - Disorganization, Disarticulation and Deregulation (Corporate Business and Capitalist Classes)

    Uploaded by

    joaquín arrosamena
    14 views37 pages

    Original Title

    Scott, J. (1997). Disorganization, disarticulation and deregulation [corporate business and capitalist classes}

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    14 views37 pages

    Scott, J. (1997) - Disorganization, Disarticulation and Deregulation (Corporate Business and Capitalist Classes)

    Uploaded by

    joaquín arrosamena

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 37
    ies. Indeed, much of my discussion so far has f ownership and control, of corporate rule and of Gn’ Britain, the United States, Germany, Japan, se national economies have, indeed, been foci of ince at least the seventeenth century, but they la contained entities. In this chap- LIST CLas; hour and multiple cultural systems’ ¢ Valen {uty a network of economic transaction, ty of ethnic and other cultural Broups ra Be ots and having a wide—though Dot neg i extent, For much of human history, worry ipa orm of ‘world-empires’, world systems wit centres, The early Chinese and Roma; ples of such world-empires. Until the §; Burope formed a marginal part of the ) Empire; it had become ‘feudalized’ in if nded by the hostile or indifferent empines of dia, and China, Feudal Europe was united by the gt of Christianity and its particular form Of ‘civiliza. jomic and political terms it was weak - Between the seventeenth centuries, however, medieval Europe th single In imper..) Tia) teenth cen. Femnants of ts structure elves into nation-states, whose territories economies within the Overarching and from Poland in the north ast west- ‘urope and including large parts of the tere grew Up a World economy with a sin- lere was a world market, for which Itural products for sale and profit [2 =" pIsORGANIZATION AND DISARTICULATION 239 fo the west—to the West Indies and the Americas—was possi? os anish expansion and by similar colonial sorties from jloves pean states. Intermediate between core and peripheral rin ee i rid-economy were the semi-peripheral regions of ior eanean Burope, later joined by the declining areas of Spain edie cwallerstein 19744: Emmanuel 1972). In the national momies Of the core—the nation-states of England, the Nether hern France—social classes of and nort ‘ ‘s of capitalist merchants i eved a Strong position. It was in these national economies, and in Bogland in particular, that the capitalist industrial take-off earred. Between 1750 and 1870, England rose to dominance as the within the world-economy, establishing a posi- tion for itself as the pivot of a liberal, free-trade system of ‘interna- tional’ economic relations. Commercial and industrial growth was the bass for the territorial expansion ofthis system of iberal capi- talism’ pero areas of the globe that previously lay outside the capital- jst world-economy. “The capitalist world-economy was surrounded by world-empires in varying states of expansion and decay. The Ottoman and Russian empires posed perhaps the greatest challenges to the capitalist world-economy, while China and India more readily succumbed to capitalist expansion. As the system expanded, the Russian empire declined and was incorporated into the world-economy as a part of its semi-periphery, while the non-imperial areas of Asia and Africa were incorporated into its periphery. The East Asian empires of China and Japan had shut themselves off from foreign influences when European expansion began to make itself felt in the sixteenth and seventeenth centuries, and it was only in the mid-nineteenth century that they began to ‘be incorporated into the capitalist world system. China retained some economic and political autonomy until the 1890s, but the political and military collapse of the empire led rapidly to its peripheral incorporation into the capitalist system. ‘The Meiji leadership in Japan sought to avoid China’s fate, and state-led industrialization was seen as an essential step towards an autonomous economic and political position in the world-economy. By protecting its markets from foreign domination, Japan entered the world-economy as @ semi-peripheral, rather than a peripheral economy. ‘The development of the capitalist world-economy helped to shape the: variations in ownership and control that have been described in earlier chapters. The transition from personal to mies ‘hegemonic’ power S AND CAPITALIST OL Aggy RPORATE BUSINESS 814 240 CORPO! . aiteatuse ofthe w 4 ession has been a feature of the Work econ, eee ichas taken varying forms in the nationg| Yah CONG» make i il italism was ag "i this system. Liberal capita SPECHE Piggy yee os t of the capitalist world-economy, a phiyge fen the a sity was undertaken in national econo. . Neg by 6 Holi es of merchants and indus Be mcives were structured into sr enterprises that were subject to the personal poss« neurial capitalists and that entered into r ; ition in their domestic markets, International economic relations for the most part, the trading of commodities that yoy, 5 within particular national economies, with merchanty ang Ee ecuy role in this international system British hegemony came under challenge from the 1870s ag indus trial take-off occurred in many areas that felt under threat from ‘Late’ industrialization in the United States, Gerrnany, rmed the world system, moving economic activity direction. Banks played a leading role in the large-scale enterprises and in the amalgamation . The growing fusion of banking and industrial was paralleled by the growing interven- ono activity, whether as supports or In this stage of ‘organized capital- increasingly under the control of eneurial capitalists had to rely on the lal possession that Berle and Means ialists, Nation ay, 1e nm rr pISORGANIZATION AND DISARTICULATION 2, gwar! jndustrializers (Gershenkron 1962). Peripheral areas pot D3 ‘calist world-economy at this time were the Balkans, the inthe ag ‘Asia, Africa, and South America. The Gonuaeeien widdle of power in China in 1949 effectively removed China from at alist world-economy and began its move in the radically dif- ic direction of socialist industrialization, from which economy cently diverged (So and Chiu 1995). ichas only re i American hegemony characterized the capitalist world-economy from the end of the First World War until at least the 1960s. American. enterprises expanded across the world, these ‘multi- mtional’ enterprises putting pressure on the less-efficient enter- prises of Europe and forcing them to restructure their own activities. Japan rose from semi-periphery to core in this period, as the United States sought to reconstruct the Japanese economy as a bulwark against the threat of the Chinese Communist state. Multinational enterprises operated on an international rather than a national scale, and production itself began to take on an international dimension. Asmultinationals came to shape the international division of labour and flow of funds, so they began to undermine the powers ofpaion a ‘As a result, national economies became increasingly ‘disarse ed’ or ‘disorganized’, and it became increasingly unrealistic think in terms of integrated national economies, eee oe capitalist classes, or powerful nation states: igh i e i in the core period, then, the growth of impersonal f DSsess i ai ized capitalism to ‘dis- economies was associated with a been seen as involving a transition CORPONATH HUAINEAH AND CAPITALISY C1 ayy, 5 adh Global Strategies and Eoonomic Disarticulation ¥ i Vhave argued, develope capitalist world economy, es ee dev Loy CA HOM th gy century onwards as a syetern ¢ IMs Telations among : Peps i inh and enterprises in ith constituent local CCOnOMIEK, Mog, f businesses involved in this trade were very anvalh, and conporay anization Was unimportant, but some of the cartiogt Capital wrinen were giant international tracers that were O1gANI¢Ed ay ck companies, Such enterprises av the British Hage Africa the Hast India Company, and the Hudson’y Hay Company » had large share capitals and were ruled by boards of uitional economic relations were almost exclusively ial transactions that involved the buying and selling of raw id of finished products, While the large trading compa. p v 1 compa d Ish overseas offices and t dling-posts in peri by capitalists but from this time on, €conomies—and most notably from n mines, railways, ranches, and other iectors of the peripheral and Inited States, Canada, Argentina, lo investment, individual ations talists 1€ on, from other land tina, dual ort- and C- le, nt pd 14 is od of d rs IZATIO} ISARTICU pISORGA ) DI ATION 243 rhe central agents in an international monetary system in rece reencies of the leading trading countries were freely sie fixed exchange rates, into string and gold (Ingham sp Bak of England was central wo the Cty and became a 89 pank ith majo responsbles for maintaining both car cen ghange fates and the domestic money supply Closely lied with the British state, whose power underpinned the expansion of pritish economic interests across the globe, the City became the focus of the international economy, and sterling became the de facto world currency: Similar developments took place in the other core economies, though these developments were nowhere as strong as in Britain. By the end of the nineteenth century the capitalist world- economy was thoroughly structured around the national economies of the core, which were linked to one another through an interna- tional financial and commercial system operated by central banks and government departments. It was this particular pattern of inter- ational economic relations that underpinned the emergence of organized capitalism and the system of finance capital. Through the nineteenth century and up to the First World War, overseas investment was overwhelmingly portfolio investment, though some American investment took a more direct form. In “direct investment’, manufacturing enterprises set up subsidiaries to operate directly in overseas markets, these locally registered and managed subsidiaries being integral clements in the operations of their parent enterprises. This form of investment grew considerably after the First World War, and it rapidly became a major element in outh America, and many parts of Baive ener cate 30s, the scale of direct investment E see Table 59). From the 1930s, the sca © 7 bee that of portfolio investment, this growth reflecting the transformation in corporate structures described in Chapter 7. ‘With the world-wide expansion of. ‘American, enterprises after the pore occas wansmngnicansstiees OT Sec on eausinos some ible 7 econ ray 4 estment has been in Canada —a level slighty the War—but there was a substantial shift in ORPORATE BUSINESS AND CAPITALIST CLasspg 24a Cl Table 59. US direct foreign investment (1929-196) iene a Se rd we} % of total investment stake jn che 1929 1949 1959 e Area 2 1968 19 14 26 oan puree eet 73 ea Latin America oneal aaa 0 23 15 16 20 nm “Totals 100 100 100 100 Source: Adapted from Barratt Brown (1974: 208-9, Tabie 20), al multinational enterprises tended to invest a obtained their raw materials or where the With the increased salience of market. however, enterprises have tended to \markets. As a result, the most favoured ent in the post-war period have been onomies (Magdoff 1970; Williams et al, > invest ere the tarket- ted to ‘oured been 5 et al. Since eater th of , for- rela- Deen one S RBS Rok ea DISORGANIZATION AND DISARTICULATION 245 domestic ae. aa Ps fe i eign a of British companies nett divided equally between the adv anced capitalist economies and c iess-developed nations. Showing a similar trend to that shown by che direct investment, British investment in Europe was grow: “erapidly than it was anywhere else. American enterprises remained a potent force in many of the key European industries, reflecting a concentration of direct investment in those industries where American enterprises held a strategic advantage. yy the early 1970s, 85 per cent of total American investment in Europe was in four industrial sectors (vehicles, chemicals, mechani- cal engineering, and electrical and electronic engineering), and 40 per cent of American investment in Britain, Germany, and France was undertaken by General Motors, Ford, and Exxon (Hughes 1973: 162-4; Turner 1970; Hodges 1974: 53). By contrast, American enter- prises in Europe accounted for just 6 per cent of all sales in manu- facturing (Vernon 1971a: 21). The hegemony of American enterprises in the core of the world-economy, then, was expressed in their dominance in specific industries that are highly concentrated and that involve the use of advanced technology: yore com- The more narrowly one chooses to define an ‘industry’, the m monly one encounters extreme rates of US participation. In Italy, during the 1960s, US enterprises were reported as controlling 100 per cent of the ball-bearing industry and most of the heavy electric industry: in Great Britain, more than 75 per cent of the carbon black industry, more chan 4) per cent of the computer industry; in France, more than 90 ne ee carbon black output, more than 40 per centof' the arleeeehs ae equipment and more than 35 per cent of the tractor machinery output. (Vernon 19714: 24; Fetaiham-also} experienced pAmesican die eecisaua alae there hav A its expansion, and Japanese enter- eee big obstacles © dne American challenge by making ises have been able to counte’ 1. United States and Europe. an effective marketing thrust into i zaibatsu had set UP subsidiary ith the Japanese defeat Ameri ing m0! howeves, Japanese colonial ? the Second World War ands despite ‘until there investment amounted to 20 per eae British oversew™ was just 1.6 RPORAT! SINESS DAPITALIS'T CLASSES "TE BUSINESS AND € ae CO! . d, above all, South Korea, Britain's entry into th. Seren acscali to move into pore oa oa jada s a of a policy of Pacific realignment. Since t he 708, howeve has increased the level of its investment in Europe, at the sg. as Best and American enterprises have beg 4 CO invest in Japan Japanese overseas investment has been especially marked in the elec. trical and electronic industries, in mage ont and in banking and finance (Dunning 1994). Most Japanese-owned operations in Europe are subsidiaries ee outside the big kigyoshudan, though Mitsubishi and Sumitomo have had significant levels of Buropean direct investment. Those enterprises. with large numbers of ‘European subsidiaries have tended also to have large numbers of American subsidiaries (Gittelman and Graham 1994: 145, 148). In 1989 there were 501 Japanese manufacturing subsidiaries operating in Europe and about twice this number Operating in the United States (Hawawini and Schill 1994: 239; Yamawaki 1994: 93). __ By contrast, foreign enterprises have found it far more difficult to ‘s idiaries within Japan, In 1970, 83 of the top 200 American industrials had Japanese operations, mainly in the electrical, oil, and sical industries where IBM and Standard Oil were major forces Japan aMe time Ds ies or to minority hold- Partners (Okumura 1983). A in Japan has been the share- the aligned shareholdings ‘Srowth of any hos- DISORGANIZATION AND DISARTICULATION 247 Apart from these countries, only Switzerland and or more of their enterprises among the top 100 an enterprises (Financial Times 1982; see also George and ng 1975: 55; Jacquemin and de Jong 1977: 98). A study of the 487 s enterprises in the world (Grou 1983) found that 237 were fom the United States. These enterprises—as I showed in Chapter were predominantly controlled through constellations of inter- ests, and accounted for the bulk of the world’s largest enterprises chat were without dominant ownership interest (see Table 60). Grou 983) discovered that the percentage of shares held, though not the somber of enterprises controlled, by financial institutions increased cobstantially between 1965 and 1978, largely at the expense of fam- iy ownership. The proportion of the world’s largest enterprises that were family-controlled declined from 39 to 20 per cent, a growth in both state and foreign ownership contributing to this decline: between 1965 and 1978 state control increased from 4 to 10 per cent, znd foreign control increased from 3 to 9 per cent. Thus, the enter- prises that dominated the world economy fell into four main cate- gories: multinational enterprises controlled through constellations ofinterests and owning subsidiaries in a number of countries; family British, French, and German enterprises based in various countries; state-controlled enterprises; and French, Belgian, and Japanese enterprises controlled through aligned participations and interweay- ing shareholdings. These enterprises had achieved powerful posi- tions within their base national economies, and their power Was strengthened by the growth of {nternational intercorporate relations The ae of British and ‘American enterprises was less marked in world banking than it was in industry alehoneithe ere largest banks in the world were ‘American, the 20 largest ‘ ape 1981 included 6 from Japan and 4 from ance ee ee United States supplied 3 each and Germany pangs ne Es oe ue 4 aie Baa ce yatanon in ey e domi ae es bond underwriters, for exam- js ass enterprises, three American, two Japanese, ple, included three Swiss 71°F gvawini and Schill 1994: 236-7) sae Gesmbne ‘has also resulted in a growth in Coe ial capital, and personal relations. These french 7 n had 5 e er nie 2 CORPORATE BUSINESS AND CAPITALIST CLASSES. 248 apie 60. Strategic control in the world's 487 largest nor-financial enterprises (1978) are Sasa ee ate Type of controller Mode of control Family Corporate Bank State Foreign None Tota ‘Majority control 25 9 1 38 26 - 99 Minority control 72 38 «24: Ci 16 - l No dominant - - = 5 = 184 334 interest SE Seen Se Totals 97 42,—=—«s«125s 47 42134134 ‘Sourte: Grou (1983: 45). Note: Because some binational and other enterprises appeared on two or more of the lists con- ‘sulted by Grou, the total number of independent enterprises was reduced from 500 to 487. The ‘cutoff point for minority contro! was 5 per cent. ‘commercial relations of international trade, capital relations of for- eign ownership, and personal relations of interlocking directorships have tied the world’s largest enterprises into a web of international connections. Through shareholdings, for example, the economies of Socal have become more closely integrated with one b of internation! the economies! DISORGANIZATION AND DISARTICULATION 249 were especially important in this international network, | Werpeir centrality in national economies. While Japanese ng “gad no international interlocks and were separated favs mecworK, American and European enterprises had riimercte fis nections. Britain and the United States were especially wel. internationally, as were Canada and the Netherlands ‘penne 1981). These inteslogks reflected the broad international aentation of tain, the United States, and the Netherlands, as well as American investment in Canada. Reflecting on this evidence, Fennema and Schijf (1985) suggested that there is a social division between Anglo-American and continental European directors, The continental European economies did not form a tightly integrated bloc, however, and German enterprises in particular had few inter- national interlocks. The German enterprises that did have inter- national connections were those that had intense links with a small number of Dutch enterprises. Indeed, continental European direc- tors tended mainly to link neighbouring national economies, largely following linguistic divisions: Belgium was linked with France, Germany with the Netherlands, and, to a lesser extent, Germany with Switzerland and Italy with Switzerland. All of the continental economies had weaker links to Britain and the United States, which were linked to one another through their common links with Canadian enterprises (Carroll 1985). Through the international network of intercorporate commer- cal, capital, and personal relations, multinational enterprises have transferred the ‘visible hands’ of capital—along with their ‘invisible handshakes’—to the international level. Corporate strategies in the multinational enterprises have become ‘global strategies’ that are relatively unconstrained by national boundaries. Asa tesult, the cap- 'talst world-economy is driven towards ever greater levels of iglob- zation’. Multinational enterprises mutually co-ordinate their activities on a global scale, and questions of national interest play ey a minor part in their calculations and strategies (Sklair 199>4: 6; see also Ross and Trachte 1990; Howells and Wood Fe aa en Non marker administrative controls within the pia al mregetses allow them to internalize market panies ie T extent than is possible in a purely nation sea Power of, multinational enterprises to override marker-pricing com ‘di, OPS in their internal transactions seeder nino : ’ inter fonnected SORPORATE BUSINESS AND CAPITALIST CLasses am ¢ Alhough the multinational system asa whole must make a profic ig Order {wares ech of te atiiats inthe system doesnot independendy pee go mreet MAL test, Moreoven, the price in any given transaction between f pair of altitiates need not be tested against competing offers in the opes marker, (Vemon 1977) 128; Brooke and Remmets 1970: 68-76) Through tans pricing and the allocation of investment funding, ‘the constituent subsidiaries of a multinational enterpri ubsidize one another and allow the overarching divisional profit centres to meer thelr targets. Ibis the profitability of the divisions and, thereby, ofthe multinational enterprise as.a whole that is the overriding con- cent ofa global strategy (Brooke and Remmiers 1972: 30 ff; 1970: 72 ff; Hughes 1973) 172-3; Hood and Young 1979; 122; House 1977).4 Asa result ofthe differential behaviour of foreign subsidiaries and domes. te enterprises in a national economy, many critical decisions are removed fiom the sphere of national decision-making. In a global- teed economy, areas of economic activity become locked in to inter- national circuits of commercial, capital, and personal relations rather than into purely national ones, The powers of nation states and of indigenous capitalist interests are increasingly countered by the powers of foreign corporate interests; and the powers of those who manage branch plants and subsidiaries are limited by the ee ternational corporate rulers in the parent compa- __ Thelangestenterprises, operating on a global scale, are the central ean italist world system, and their actions constrain the s to ae in its constituent economies. that shape development of particular ‘taken in the board-rooms of Bete: “ \s @ result, each of the advanced : tendencies: DISORGANIZATION AND DISARTICULATION 54 ses. While the United States and Germany themselves, as nd powerful economies, have retained a relatively higher es national integration than have the weaker economies of the soit alist core, they are also affected by the activities of; multinational corprises based outside their national boundaries, Only the sppunese economy has, until recently, been able to withstand the ‘dis. izing’ effects of globalized commercial, capital, and personal relations. In Europe, with its complex interweaving of international ital movements, the development of each national economy is now significantly influenced by the operation of foreign multina- tionals based in the United States and in other European countries. Capital accumulation in any one economy occurs as the unin- tended consequence of the intersecting global strategies of multina- tional enterprises, and it becomes increasingly difficult for nation states to pursue distinctively ‘national’ economic policies: The capacity of any government to command a particular firm to take a specified task in support of public policy, such as settling in a backward region or holding down a key price, has been reduced; large firms now have a capacity that they never had before for choice between competing nations. (Vernon 1977: 63) Cross-border flows of capital are co-ordinated by ‘transnational prac- tices’ that are beyond the control of individual nation stares (Sklair 1995). These states are therefore measures to control activities within their own boundaries. This is enter ng a 252 CORPORATE BUSINESS AND CAPITALIST Ci.Asses peripheral economies, such as those of Latin America (Pr, Enterprises are simply juxtaposed rather than being grated among themselves, and each is separately and grated into multinational enterprises ‘whose centres o the centres of the capitalist world’ (Amin 1971: 289; 1973: 237), Now the economies of the capitalist core themselves have become more and more disarticulated, The growth of mutual inward inye in Burope, for example, has meant that the external linkages of industries dominated by foreign capital become more important than their linkages to other industries within their economy. The networks of capital, commercial, and personal relations within par ticular national economies become less dense and more fragmented: and the various fragments become tied into close capital, commer. cial, and personal relations with global enterprises based outside their boundaries. The expansion of one sector or market has far less impact on the development of other sectors within the same econ- omy, and the development of the economy as a whole becomes increasingly uneven. In the face of this disarticulation, it becomes dif- ficult to identify coherent national economies. Circuits of capital flow on a global scale and no longer overlap with one another; and through this disarticulation of capital within particular economies, each economy is decentred. Central to the growing disarticulation of national economies has been the transformation of the world financial system. Since the 1970s, money and capital markets have been globalized through the expanding international branch networks of American, Japanese, and European banks, the establishment of multinational banking corporations and banking groups and, above all, the growth of new money markets in “Euro-dollars’ and other ‘Euro’ currencies unreg- of commodities and securities, ' ‘ is that are wolves flow.of information andi eager ‘nae _? Baker (1984) and Thrift (1995) have both argued thar &-- pital and ies, has he he se, ng, w e p ) c i DISORGANIZATION AND DISARTICULATION 253 senational economic practices that are increasingly detached aa ehe process of production itself ene City of London has remained an important financial centre wathin the globalized financial system, though its activities are Josely geared to those of the money and capital markets of New York and Tokyo. The City now functions as a European financial centre, concerned especially with the mark rather than with ster- ling, and it is the focus of the circulation of the mark, dollar, and yen. Between 1979 and 1986 the proportion of pension and insur- ance capital invested overseas doubled (Lash and Urry 1994: 20), and the relaxation of exchange and capital controls, together with the removal of domestic banking and credit controls during the 1980s, has meant that the British state has increasingly lost control of exchange-rate and interest-rate changes in the British economy, The centrality of the City to the global financial system makes the British economy peculiarly exposed to the disarticulating effects of globalization: overseas competition, inward direct investment, and overseas borrowing have all expanded massively without any sig- nificant hindrance, and the ‘integrity’ of the economy has become almost non-existent. While British overseas assets amount to 30 per cent of GDP, this is matched by a similar total of short-term liabili- ties to foreigners. There is, as a result, a ‘growing territorial non- coincidence between extending capital and its domestic state’ (Murray 1971: 96): There is... a tendency for the process of internationalization to increase the potential economic instability in the world economy at bis same time as decreasing the power of national governments to control economic activity even, ee own borders. (Murray 1971: 102-3; Picciotto and Radice 1973: 63; Mandel 1972: 316; 1970) Banking i ‘have been jnternationalized as separate and relatively prmenenieess circuits of capital. So they are de-synchro- nized and in no sense come together at the boundaries of individual eae (Lash and Urry 1994: 286), In the face of such disartic- cae eats have sought to increase the level of their political inte- gration “one another through international bodies such as the ee Monetary Fund, ‘the World Bank, the European 2 aa ‘on (Held 19914). There is no longer any territo- jal coincidence ‘perween the political forms of states, the flow of ae come transactions, and the ‘cultural and communal boundaries of ‘societies’. The ‘capitalist-world system becomes an increasingly 254 CORPORATE BUSINESS AND CAPITALIST CLasspg fragmented political and social system (Lash and Up Ray and Reed 1995). a The implications of economic disarticulation jn u economies have been particularly well-studied in Telation

    You might also like