Global giants know no nation's borders

March 13, 1994|By Peter H. Stone

Several large U.S. food producers have been lured to move their operations to Mexico because it has fewer environmental regulations. Japanese corporate giants such as Sony now look to less developed countries in Asia and Mexico as prime manufacturing sites to cut their costs. The German auto titan Mercedes-Benz is about to open a manufacturing plant in Alabama to take advantage of lower American wages.

Welcome to the globalization of business. Over the last few decades, a few hundred global companies -- using the newest technologies and marketing tools -- have reshaped the economic, political and cultural landscapes of many countries. "Global Dreams," written by Richard J. Barnet and John Cavanagh, provides a sweeping and trenchant look at the changes under way in political economies worldwide.

Spurred by global competition, cost-cutting pressures and the merger mania of the 1980s, more and more big businesses are thinking and planning globally.

Early on, the authors, who hold senior positions at the Institute for Policy Studies in Washington, stress that their book is not an expose about corporate misdeeds or greed. Instead, they have set out to examine the "winners in the global fight for markets in order to better understand the global system that is being created and where it is going."

Still, the authors have strong views about the risks posed by such powerful global entities. "Global Dreams" is a cautionary tale about the dangers posed to our environment and many citizens unless global companies are better regulated by both international and local institutions. Well-written and voluminously researched, the book offers a first-rate critical analysis of how big business has developed internationally and some fascinating insights into the directions it is headed in the next century.

As the subtitle, "Imperial Corporations and the New World Order," suggests, the book argues that global companies have increased their reach and clout in recent years, often at the expense of various national governments, which have seen their power wane. In several countries, the giant multinationals have become de facto makers of public policies.

"By default, business enterprises are wielding political power in many important ways," Mr. Barnet and Mr. Cavanagh write. "Economic ties across national borders have become so strong, so deep, and so complex that political leaders can no longer make successful use of traditional strategies to deal with such problems as unemployment, ecological deterioration, and the corrosive effects of chronic poverty . . ."

Increasingly, these global giants have focused on opening up new markets overseas and shifting jobs to lower-wage countries. "Global Dreams" takes a panoramic view of corporate expansion in such diverse areas as entertainment and media, consumer marketing, manufacturing and high finance. The book's narrative built partly around profiles of several of the world's biggest -- and in some ways most pioneering -- global companies, including Sony, Bertelsmann, Philip Morris Co., Ford Motor Co. and Citicorp.

Mr. Barnet (who wrote "Global Reach" in 1974 with another author) and Mr. Cavanagh back up their thesis with plenty of anecdotes and analysis.

The chapter on Philip Morris documents the firm's global drive to boost overseas sales as U.S. domestic tobacco sales have plummeted. Aided by strong arm-twisting from the Reagan and Bush administrations -- particularly in such countries as Japan, South Korea and Taiwan -- total U.S. tobacco exports soared from $64 billion in 1986 to $142 billion in 1989.

Banks, too, have been driven by "the allure of quick profits in distant markets" where regulation is often minimal or nil. Mr. Barnet and Mr. Cavanagh conclude: "The money of local depositors is being sucked into speculative global securities and away from local communities . . ."

More broadly, the authors voice strong doubts about the long-run consequences of global corporate planning that exalts profitability, efficiency and productivity over creating stable jobs with decent pay. "Production becomes more efficient in an economic sense, but . . . more of the world's population are fated to be window shoppers, not customers."

Not surprisingly, because of its ambitiousness and the far-reaching territory it covers, there are some sections that suffer a bit from over-generalizing. For instance, in examining the global dreams that are fostered by the booming business of exporting such U.S. cultural products as films, video and music, the authors occasionally lapse into pop sociology.

Nonetheless, "Global Dreams" is an impressive work that should serve as Baedeker for all those concerned about the changing economic fortunes of nations. The authors have helped make sense of disparate economic developments and the myriad ways that global businesses influence -- for better and for worse -- all our lives.

Mr. Stone is a reporter for the National Journal.

Title: "Global Dreams: Imperial Corporations and the New World Order"

Author: Richard J. Barnet and John Cavanagh

Publisher: Simon & Schuster

Length, price: 480 pages, $25

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