"I'm in love with the private sector."
- A.W. Clausen, president of the
"No other entity is better equipped to bring together resources, expertise, capital and markets on a global basis (than)... the transnational corporation."
World Bank, October 30, 1981
- A. W. Clausen, president of the
"Without our system of private enterprise, this nation certainly cannot continue to enjoy the economic, cultural, and political freedoms that form the backbone of America. Over the years, this bank has earned a reputation for standing up for our system. In the future, I assure you that we will continue to lead the fight against the critics of private enterprise."
World Bank, September 21, 1981
- Willard C. Butcher, then president
"Developing countries must ensure that barriers to foreign investment are reduced to a minimum."
now chairman of Chase Manhattan Bank
April 15, 1980
- Jacques de Larosiere, managing director
"One of the reasons I am in power today, I think, is because I have maintained and insisted that free enterprise be the principal agent of change."
of the International Monetary Fund,
- Ferdinand Marcos, president of the
Phillipines, Nov. 24, 1981
There's not much that's new in these sentiments, except that over the past year, since the election of Ronald Reagan, it has become fashionable in the American media to give new attention to such boosters of "private enterprise."
From Reagan on down, the current administration voices a commitment to the alleged virtues of the "free market" that is so fierce and unqualified it could be called economic Darwinism. Unleash business to fight out their endless struggles for profit and power, unfettered by government regulation, and prosperity for all will be assured... somewhere down the road.
But not all businesses are equal in this competition, and people - as voters, workers, consumers, owners, or dependents - have only the tiniest fraction of decision-making power compared to the corporate managers.
The fact is that wealth and power accumulate, and the process of accumulation overrides "market forces". Corporations seek to grow, and as they become more powerful they can grow at an ever-faster rate, regardless of consumer demand. And even though government, in a liberal democracy, is supposed to play an overview role of assuring that the needs and desires of the people are fulfilled, government is increasingly powerless to control the largest corporations. As Tim Smith points out below, this has led groups such as the churches to apply direct pressure on corporations to act more responsibly. And many governments abroad have even less ability to monitor, much less to regulate, huge transnational companies. Penny Lernoux cites several examples below of Latin American governments which are either at the mercy of global corporations, or are in collusion with them against the interests of the people at large.
But while the distortions that arise from the concentration of power in the corporate sector are growing, there are many people around the world who are working in diverse ways to fight back.
In this issue of Multinational Monitor, we present our first Annual Report on the state of multinational corporations - what they are doing, and what people and organizations around the world are doing about them.
To compile this report, the editors of Multinational Monitor interviewed 10 people whose work centers on analyzing the activities of multinational corporations, and in most cases, trying to make them more socially accountable.
We invite readers to respond with their views - about multinationals, or about the commentaries printed below - so that the discussion can be continued in our letters to the editor section, in future issues.
Richard Barnet, author of Global Reach: The Power of the Multinational Corporations, is a senior fellow at the Institute for Policy Studies in Washington.
Since 1974, what trends have been taking place involving multinational corporate investments and practices?
The major change is the rise of non-American multinationals and the intensification of oligopolistic competition.
As the economy has turned down, as competition among multinational firms heats up, the pressure has increased to find cheap labor and to expand markets by the most aggressive means.
What role are multinationals playing in third world countries?
I just came back from the Philippines, and there is a very clear case where the multinational companies contribute to the distortion of local development.
The Philippines is a country where large numbers of people have no electricity and no water. The companies, however, are in a position to take a great deal of it. They use the resource - which is in very short supply - to produce a product for export.
Take the Ford plant in Manila. It's a tremendous user of electricity, and it's exporting that electricity in the form of cars that go out of the country. In terms of the ultimate user and consumer, the electricity doesn't go to the Philippine people; it goes to the American and European consumers who are the primary purchasers of automobiles.
Also in the Philippines, the political attitudes of the multinationals has been very clear. When martial law was declared in 1972, the American companies openly embraced it. They have supported Marcos down the line. And it's no big secret that Marcos and his associates are utterly corrupt.
This alliance between a corrupt local ruler and powerful economic
forces from overseas - particularly the United States - combines to
keep down the opposition.
How do multinationals exert political influence on third world governments?
The kind of situation exemplified by ITT in Chile is exceptional. It's too risky. Still, corporations most certainly play a political role. They lend their support to local legislation that could improve their profit situation in countries such as Chile, Argentina, Peru, the Philippines and so on. And they argue against social legislation that would raise corporate taxes. They're quite vocal about it behind the scenes.
How do these corporations gauge on political grounds the desirability of investing in a particular country?
On the one hand, the multinationals do not support a policy of unyielding hostility to any particular potential market or resource-producing area of the world, regardless of the ideology of the government.
On the other hand, the distinct preference of multinationals for specific kinds of governments is clear: that is, orderly repressive governments that are able to maintain stability .
It's all very pragmatic. If Chile "works" in the sense that opposition is kept to a minimum and a stable economy is maintained, it is in fact possible for corporations to squeeze the workers' wages. That's quite satisfactory from the standpoint of the multinationals. When the government loses control, however, and there is active insurrection followed by well-publicized repression, then the companies don't like that so much. They fear for the future of their operations.
If a national liberation movement succeeds - though the corporations would prefer that it failed, because the kinds of arrangements they could make with an Argentina are a lot better than the kinds they could make with a Nicaragua or an Angola - nevertheless the companies will do business with the new government. They will do business with anybody.
Can developing countries control multinationals?
A host country has limited alternatives if it really wants, needs, or depends (or thinks it depends) on that investment.
For most countries, it will not be possible to deal effectively with multinationals until the industrial countries themselves - the countries that are the base of the multinationals - perceive policing these companies to be in their national interest.
Why should the power of American multinationals be of concern to Americans?
There are fundamental conflicts between the interests of the American-based multinationals and the national interest of maintaining employment, preventing pollution, preserving the tax base and controlling the money supply. In all of these areas, the day-to-day activities of multinationals threaten national policy.
As long as companies can pick up and leave Gary, Indiana and Youngstown, Ohio at will, there's no way you can have a stable employment base or a community that can really survive.
What can people in the United States do to try to control these corporations?
The issue of democracy versus the specific interests of private corporations needs to be dramatized in a new way. To have decisions being made by small numbers of people whose interests are quite special is not simply unfair, unjust and against our stated goals; it also leads to a disaster.
Concentrated power always makes for terrible mistakes. The more concentrated the power, the greater the mistakes, and the greater number of people who suffer.
Anna Gyorgy, editor of No Nukes: Everyone's Guide to Nuclear Power, is director of the Washington-based Critical Mass energy Project.
What is the role of multinational corporations in the nuclear industry?
There are three major areas of multinational involvement in the international nuclear power economy. Multinationals such as Exxon, Rio Tinto Zinc and Getty Oil are involved in mining. Second, they are involved in the trade and transport of nuclear fuel to about 600 reactors worldwide. And third, they manufacture the hardware.
Most of the international trade in nuclear hardware has been dominated by General Electric and Westinghouse. In 1973, those two firms accounted for 90% or more of the world's nuclear trade. But since the mid-70s, we've seen a shift away from U.S. domination of the industry. Kraftwerk Union and Siemens, both West German firms, have made their own nuclear deals with Brazil, Argentina, Iran and Spain. The French are also very active internationally, under Framatome, which has sold nuclear power plants to South Africa, Belgium and Iran.
How are these nuclear sales financed?
Reactor manufacturers are not able to provide the kinds of financing necessary for these multibillion dollar deals. This is where the state gets involved.
Over the last 10 years, the U.S. has provided generous financing terms through the Export-Import Bank totalling up to some $10 billion. Exim loaned the Philippines more than $1 billion to purchase a Westinghouse reactor - one that is sited on a volcano near an earthquake fault.
Recently, however, the U.S. has not been able to offer as generous financing terms as other countries such as France, which lends at low interest or no interest.
Has there been much organizing on an international level to oppose uranium mining?
The first international conference on uranium mining was held in Copenhagen in September, 1979. It brought together native peoples from Australia, Namibia, Greenland and Europe. Eighty percent of uranium resources are under native land: it is really an international native lands struggle.
At this conference, the Southwest African People's Organization (SWAPO) of Namibia declared that uranium mining was an anti-social act and should be opposed, which SWAPO has continued to do actively.
In Australia, there has been longtime opposition to mining, led by the Australian Council of Trade Unions, which has over 140 affiliated unions representing some two million members. For years they have refused to move uranium by rail - which is how yellowcake travels. They have also opposed the loading and unloading of uranium ore for export. But in a very recent setback on December 8, their executive met and vetoed their anti-uranium stand, at least until February, when they will reconsider their position.
In October, the international nuclear industry held its trade fair in Basel, Switzerland, and there was so much opposition by activists who came from all over Europe that it's very possible there will never be another trade fair like that. People demonstrated outside, and they were atacked by police with rubber bullets and tear gas. It was like an armed camp for three days, which really alienated the people and local government of Basel. It was bad publicity for the nuclear industry.
How is the industry reacting to protest?
The multinational resource companies that are staking out claims for uranium around the world are definitely taking a long-term view. But the opposition is strong enough now that the industry is met with protest at absolutely every level, whether it be construction at a nuclear plant site, or the mining or transport of fuel. It's a completely decentralized movement, but one that is international.
There have been a number of successes over the past year. For instance, a ship transporting nuclear fuel was kept out of Hawaii when local activists discovered and reported that the ship was carrying highly radioactive fuel and was refueling right in Pearl Harbor, right in the main harbor of Honolulu.
And Greenpeace has launched a big international campaign against the shipping of nuclear fuel and against nuclear waste dumping. They've sent boats out trying to block shipments off the European coast this year, which has really dramatized the issue.
So where people have acted, there have been measured successes.
What do you see the anti-nuclear movement doing next year?
There will be increased opposition to uranium mining and increased attention to the links between commercial nuclear power and military nuclear power. The entire European movement against the missiles really comes out of European opposition to nuclear power. The links are very strong.
Saralee Hamilton is a coordinator of the Women's Network on Global Corporations, based in the National Women's Program of the American Friends Service Committee in Philadelphia.
Are multinationals an object of special concern for women?
The concentration of capital and resources affects everybody, but it affects women in particularly damaging ways,_ for it increases the subordination of women in the international division of labor.
Multinationals see women as a super-exploitable workforce, and institute deliberate policies of preferential female hiring. Women comprise a largely unorganized workforce in light manufacturing. for exports_ - textiles, microelectronics, shoes, toys - located in the free trade zones in East Asia, on the U.S.-Mexico border, and in the particularly vulnerable unorganized areas of the United States - all places where runaway shops are running to. The reason they are running away in the first place is to maximize profits every way they can, including seeking to locate in countries that don't have occupational safety regulations.
Why do multinationals prefer women as a workforce?
Corporations hire women because men are unwilling to do the kind of work women end up doing, because the companies fear that men are more organizable, and because the corporations can get away with paying women less.
What specific issues has the Women and Global Corporations Network been working on?
The most explosive area that we've been looking at is pharmaceuticals. The pharmaceutical industry is one of the few where there seems to be no evidence of any direct relationship between the costs of producing drugs and the price of those drugs. That's because of the protection of patents, as well as the mystique around the lesser attractiveness of generics and the mystique that more drugs mean more health. We reject the pill for every ill approach to health care; it throws up an obstacle to better preventive health care and shifts the emphasis to curative health care.
Lack of decent health care can be especially debilitating for women, who tend to call on a health system more than men do. Some of that has to do with women's role in reproduction. We have been very concerned about the dumping of ineffective or basically lethal contraceptives, such as Depo-Provera and the Dalkon Shield.
So we are interested in problems of pharmaceuticals - from a general health care standpoint, an economic well-being standpoint and also from a reproductive rights standpoint.
We are also doing work on advertising as a form of social control, an attempt to manage social change. For instance, there are tremendous messages about the family,, such as the role different family members play in the little vignettes that appear in ads for [domestic] appliances.
What can be done to address issues of corporate power?
We need to develop new forms of organizing to meet the needs of women workers more adequately than the gender-free assumptions, or the assumptions that indicate that one is thinking of a male workforce in form, style and issues of organization.
The process used in organizing is often as important as the nature of the demands. Helping people develop their own sources of information, their own strategies, their own skills in organizing is an absolutely critical part of the process. It often means that people need to deal with parts of themselves other than their worksite selves before they can become more fully political.
Were there any success over the past year - victories for popular control over multinationals?
I unite with those who rejoice in the passing of the marketing code for infant formula.
And there have been a few bright spots on the reproductive rights campaign. Zimbabwe's ban on DepoProvera was significant. That elevated the question of dangers to women's health and dangerous contraceptives to a properly political level in the world.
Doug Johnson is the director of the Minneapolis-based Infant Formula Action Coalition.
What is the most important role that multinationals are playing in the world economy?
They control technology; they control ideology; and they control resources, all in the context of a political structure which is essentially undemocratic. Neither consumers nor workers have any kind of democratic control over what transnationals do or what kind or decisions they make. These companies have a tremendous power to shift resources around without really touching bases with the needs of communities in which they function.
How have the infant formula companies responded to the international campaign INFACT has spearheaded?
The infant formula companies put a lot of energy into trying to defeat the code. (Infant Formula Marketing Code, passed by World Health Organization in May, 1981.) The industry wide associations have considerable political clout and tried to undermine the international decision-making structure, for instance by hiring the former assistant director general of the World Health Organization to be their lobbyist.
Once the code was passed, they've had two strategies to try to prevent its implementation. One is to have their marketing people lobby very hard on the national level against the code. Secondly, they've all set up special funds, trying to define what research will be done and published around this controversy in the hope of turning the tide of scientific opinion which right now is running against them. Abbott Laboratories has given $1 million to the American Pediatric Association; Bristol-Myers another $1 million for research on infant health; and Nestle's has set up the Nestle nutrition center in
Washington, with twelve people distributing incredible amounts of money to 'nutrition departments, health departments, and health professionals.
We are very concerned with the methods transnationals use for influencing health care in the third world. These companies give grants and research fellowships to professionals to attend meetings; or send free goods to private clinics or directly to physicians in exchange for their distributing drugs and products like infant formula.
For most health professionals in developing countries, access to objective information is nil. They receive most of their post-graduate education from industry, which only "educates" them in those areas that have economic benefit to the companies.
How do you assess the success or failure of the infant formula campaign?
The infant formula campaign shows that giant companies are vulnerable. And in many ways they are vulnerable just because they are multinationals.
Nestle - the world's largest food company - is in 87 countries. We have the boycott operating now in eight countries. That's a new move, to have an international grass roots boycott of that sort. It gives us a tremendous amount of flexibility. And we now have the baby food action network organized in 65 countries, which monitors companies' compliance with the WHO code.
Do you see similar kinds of organizing tactics as being applicable to other issues involving other multinationals?
To deal with transnational corporations, you have to organize internationally. The infant formula campaign shows not only that this is necessary, but also that it is possible to link local grassroots work in the U.S. with national work, with international work, and then back to grassroots work in the third world and Europe. I think that's probably the success we are most pleased about.
Penny Lernoux, author of Cry of the People, is currently in Bogota, Colombia,
working on a book about commercial banks and corruption in Latin America.
How are multinational corporations operating in Latin America these days? Are they expanding investments or cutting back?
With the exception of the extractive industries, agribusiness and finance, I'm not seeing great expansion down here because the recession in Latin America is pretty bad. We have the same monetarist policies Reagan has.
How does monetarist policy affect multinationals in Latin America?
A number of the subsidiaries of multinational companies are suffering badly. In Argentina, for example, a good dozen of the corporations have been forced to close down. They traditionally relied on local capital. But with the current recession, with interest rates of up to 80% a year, and most of the capital going into financial speculation, they are finding it heavy going. The consumer market has shrunk as well, and that also hurts multinational corporations' subsidiaries, most of which are based on the local market. Look at the car companies; they are doing terribly badly all over Latin America, even though they. have the advantage of size and the first shot at local credit.
I do, however, distinguish between the multinational corporations and the banks. The interests of the multinational corporations don't necessarily coincide with thaw of the banks. The banks are doing very well, very well. I am talking about profits of 60-70%.
How do the foreign banks manage to make such high profits?.
The name of the game down here in Latin America is financial speculation. The international banks obtain capital on the world markets - let's say at the New York prime rate [currently around 16%] - and then they relend that money in the internal Latin American market at whatever the going rate is. In Colombia, it happens to be 50%.
How about the extractive corporations, how are they doing?
They are the exception. They are doing very well. It's the one area where we have seen large investments - in coal, in nickel, in copper, in oil. Take Chile, for example. Despite Pinochet's propaganda, the only large investments that have come into Chile have been in copper.
I should add one other group - agribusinesses. They too are continuing to invest and are doing quite well. Both food and mining are exceptions to the underlying trends.
Why is it that they manage to turn a profit, whereas the others do not?
Because the agribusiness corporations are based almost entirely on the export market, and they are working on a very low level of capital investment. They contract out the risk, the machinery and all the rest of it to the local farmers. And on the internal market, people can do without cars and without refrigerators, but they finally can't do without food.
With the extractive industries, what are the terms that the companies are getting from the governments?
In the current atmosphere, the terms are being renegotiated marginally in favor of the foreign companies, such as in Colombia. And in Peru, the Belaunde government has now come out with new contracts much more favorable to the corporations. In Chile, the Pinochet government is bent over backwards to attract foreign investment in the mining sector and indeed is talking about selling the state-owned copper mines - that are known to be very rich - to the companies. There's been some change in Argentina as well: improved terms for the oil companies.
What is the social situation in these countries?
If you look at the statistics, everything is deteriorating. Real wages have shown a decline; malnutrition is increasing; there's an increase in common crime. In a number of countries such as Peru and Colombia, this has led to an increase in guerrilla activity. Chile and Argentina are pretty quiet, however, because they've been terrorized and cowed by the military regimes.
How does the deteriorating social situation affect multinationals? Does the guerrilla activity target the companies, or just the governments?
There's both because they identify the government with the multinational corporations. In Latin America generally, there are kidnappings of American executives, bombings of American installations, threats.
How are multinationals connected with the local governments and ruling elites?
Normally they are in partnership with them, that is, they can have a member of the local elite on their board, or they can have a financial or contractual arrangement with these elites.
The same people who run the government happen to be connected to these large financial groups. In Colombia for example, the official candidate for the Liberal Party - which is the largest party in the country - for the upcoming elections next year is Alfonso Lopez Michelsen. His cousin is Jaime Michelsen, who controls the Grancolombiana group, which owns the biggest bank in Colombia. Lopez is in partnership with Jaime Michelsen in a number of businesses, including control of the largest television chain in Colombia. If you read very carefully what Lopez is proposing in his economic program, it's very favorable to financial groups and it would open the door to foreign investors and bankers to come into Colombian companies anonymously.
How do you assess the role of the World Bank and the International Monetary Fund in Latin America?
The World Bank's loans, quite contrary to its propaganda, have been going into large infrastructure projects (which is a source of debt as well) or into balancing of the budget - anything but helping the poor, which they say they are doing.
But I think a more insidious effect is that the World Bank, their technicians, their reports, their counsel encourage these governments to continue on this monetarist path, which socially and politically is a disaster.
Monetarist policies are the policies of the International Monetary Fund and the policies of the transnational banks. These policies benefit banks; they don't necessarily benefit multinational corporations.
What in your opinion has been the most significant event over the past year or two involving multinationals - banks and other companies - in Latin America?
The most significant development is the very clear emergence of transnational banks over multinational corporate activity. You can see it in other places like the Philippines, but I think in Latin America it is the clearest because transnational banks have their biggest investment and are most active here.
One might even say it is the end of an era for the rapid expansion of multinational activities in the manufacturing sector.
Cheryl Payer, author of The Debt Trap: The International Monetary Fund and the Third World, has just completed work on a book about the World Bank.
How do you assess the role of the World Bank under president A. W. Clausen as opposed to the role of the Bank under Robert McNamara? Some observers have suggested that with the Reagan Administration in power, the World Bank is making even greater efforts to support multinational corporations and banks.
The World Bank couldn't move any further in support of multinationals than where it
already was under Carter and McNamara. In the first place, you can't identify Clausen with
Reagan; Clausen was appointed by Carter. And McNamara is certainly no less a friend of
multinational corporations than Clausen is. I'm sure McNamara would be insulted by the
suggestion that there was any conflict of interest between poor people and multinational
corporations. He has never once admitted that there would be such a conflict. And as soon
as McNamara left the Bank, he joined the board of Royal Dutch Shell.
The World Bank is changing its rhetoric to try to meet the Reagan challenge, but the ironic thing
is all it has to do is brag about what it's already been doing.
What Clausen is doing is no different from what McNamara was doing. Clausen's just extending the same things:. Bank co-financing, investment insurance, the IFC. (The International Finance Corporation - IFC - is a branch of the World Bank which lends to Third World countries for projects that require the hiring of multinational corporations.) The IFC
was expanded under McNamara. All Clausen is saying is: "This is what we're doing for private capital; we've got it there." It's a very artful job of public relations.
What about the international Monetary Fund? Is its role changing?
It's shelling out a lot more money, but it can't be any more strict in its conditions than it has been already. The IMF has been horrendous on this since the 1960s.
The implication of giving out more money is that actually the IMF may be less strict in a number of cases. It is really interested in pushing the money, keeping certain governments in power, like Turkey, Sudan, Zaire; with them, the IMF is not going to be strict at all.
Is this because the IMF wants to go easy on U.S. allies?
Certainly. That's very clear.
What new operating strategies are multinationals following?
In certain specific types of manufacturing, such as textiles and electronics, there is obviously a new global production line. You find very specific parts of the production process being farmed out to cheap labor areas - Malaysia, the Philippines, South Korea, Taiwan, Indonesia, a number of Caribbean countries, Mexico on the border. This is a new phenomenon which has developed in the last 15 years or so. These industries tend to employ mainly young and unmarried women. It's a pool of employed people who had not worked for wages before.
What is the impact of these textile and electronics industries on the economies in which they invest?
These industries are not sinking any permanent investments into the economies; they're ready to pick up and move as soon as they find another country with cheaper labor.
What effect will Reagan have on multinationals?
The Reagan Administration is going to be very, very bad for these multinationals in the Third World because he's been so naked in his support of them that this liberal camouflage you had under Carter is lost.
But frankly we didn't have a whole lot to lose in good deeds abroad before Reagan came in. You can't go much further in helping multinationals operate internationally, than the U.S. government has consistently gone since the end of World War II.
What should people do who are worried about the power of multinationals?
Work to stop foreign aid to El Salvador and South Africa, and prevent military intervention. I tend to be a great believer in the nuisance value of any opposition.
Randall Robinson is executive director of Transafrica, a Washington-based black lobby on African and Caribbean issues.
What in your opinion is the most important or serious role that multinationals are playing in the world economy these days?
With respect to Africa particularly, multinationals are playing a very serious role in underpinning the South African government's capacity to resist change and to perpetuate the apartheid system.
American corporations comprise only about 16% or 17% of the total foreign investment, with West Germany having about the same amount, and Great Britain about 50%. But more importantly, the American corporations are in the very strategic corridors in their involvement there. They supply some 70% of South Africa's computer capacity - with Britain supplying the other 30% - so that the administrative infrastructure there would fall apart were it not for the Western corporate community's involvement. About 44% of South Africa's oil is brought in by American oil companies: Exxon, Mobil, Caltex. And the country's automotive industry is equally dependent on Americans.
Corporations find South Africa attractive because black labor, on which the economy depends, gets paid about 10 times less than do the whites.
There is some similarity between the South African experience with multinationals and that of much of the rest of Africa, and indeed the developing world as a whole.
Corporations tend to be attracted to places where the profit yield is high, and unionization is not encouraged and sometimes discouraged or outlawed by the government. A tapper, that person who taps a rubber tree, on a Firestone plantation in Liberia makes something in the order of $9.00 a week for a six day week. In Haiti, there are no unions; that's why American baseballs are made there.
This labor policy by multinationals affects the American job situation. Since the union movement is strong here, corporations export jobs to countries where deals are made with governments unsympathetic to the interests of their own people. People in those countries are hurt; people in this country are hurt. And the only people served by it are the corporations and the governments that are in tow.
So, for the most part, the transnational corporate community has not been helpful to development in the third world, and in many cases has propped up repressive regimes with all manner of o support. General Motors even has a contingency civil unrest agreement with the South African government; in the event of disorder they have committed themselves in advance to come to the aid of the South African police and military authorities.
What needs to be done in the U.S. and the developing world to gain more control over corporations?
You have to start with an awareness of the role that corporations play. Corporations thrive on public apathy. So much of what the companies do the American citizenry has no idea of the details, because all of that information is beyond reach. Americans need more information - and need it very badly. I think if they knew more about the role that corporations are playing in their own political and economic situations, Americans would be more activist, more involved. The real problem is ignorance.
The third world needs a good deal more leverage. In many cases, Firestone in Liberia for instance, companies employ a large number of people. To challenge the company puts the government up against the wall: the company says, "If you do A, then we'll pull out." To call the bluff of a company can mean the political demise of a particular government, since it may cause a lot of people to lose work. And no matter how difficult the work, or unwholesome, or hazardous, nonetheless it's work.
Over the past 12 months, were there any events concerning multinationals in Africa or elsewhere you thought were particularly significant as victories for more popular control?
The most significant thing in South Africa of course is the union movement. That will in all likelihood be an important cutting edge against apartheid. And a lot of the outbreaks of trouble for the South Africans have come against those American corporations that have been thought to be more liberal than some of the others - for instance, the Ford strike in Port Elizabeth. The union movement is very rapidly growing in South Africa; it's probably the most remarkable thing that has happened there in a while. -
Do you think that the stockholder movement and the university divestiture protests have been successful?
If one thought that that alone was going to turn the corporate community away and bring down the apartheid apparatus, then they weren't successful. But that was never the intent. The intent was to provide early sparks, to mobilize opinion in the United States on the broader question of what the American role has been and should be, in South Africa. In that regard, I think it's been very helpful.
What we're trying to build is a kind of national groundswell of concern about this as a moral issue. And in that connection I think it's been successful. I think it will be even more successful once we shake our young students from this long night of sleep that we've been in. '
Ray Rogers is the director of Corporate Campaign, a New York-based organization which conducts research, develops strategy, and supplies organizers for labor and community groups.
Why do you think multinational corporations are important objects of study and targets of organizing drives?
Because they have the ability to move money around. By controlling the flow and direction of money, they make decisions that tremendously impact the world economy.
Also, multinationals are certainly a force for effectively disorganizing any organized or stable group that may challenge their power - in cluding labor unions.
You were instrumental in the successful drive to unionize J.P. Stevens after 17 years of staunch management resistance. Could you assess the impact of the consumer boycott, and the financial campaign you engineered?
The corporate campaign was extremely successful. In fact, if it wasn't for the corporate campaign, I question whether there may have ever been a contract with Stevens.
I didn't work on the boycott, but in terms of its economic impact, I was very much aware that the boycott could never serve as a real weapon to bring any real economic pressure on Stevens. At best, it could serve as a public relations weapon. It was the corporate strategy that. . . really brought the company to the bargaining table.
Could you briefly sketch how you went about that campaign?
What I did was I identified the power structure behind Stevens; that power base was in the form of interlocking directorates, large stockholdings and multimillion dollar loans. I knew when push came to shove, there was a group of insurance companies that had the power to tell Stevens to go to the bargaining table overnight. Those three insurance companies were Metropolitan Life, Equitable, and New York Life. Led by Metropolitan' Life, they controlled about 80% of the long-term debt into Stevens.
How did you get these institutions to exert this kind of pressure?
Realizing that these institutions would only exert such influence if it became in their own primary self-interest to do so, I figured they had to be heavily drawn into the Stevens controversy so that their own image, reputation, and credibility was seriously jeopardized in large segments of the population important to their overall growth and prosperity.
So how did you draw them into the controversy?
I used confrontational tactics. The first thing I did was to organize a very large demonstration at Stevens' annual shareholders' meeting in 1977 - over 600 people were inside to start proxies and about 4000 people outside. The reason I did this was to say to them, "Look, anybody heavily tied in or supportive of J.P. Stevens would be held accountable by a broad coalition of groups - not only labor unions, but public interest groups, students, religious, political, community and women's organizations.
The other two things I had in mind were raising the issue in the national press, which it did, and intimidating Stevens' highest officials in an eyeball-to-eyeball confrontation.
What tactics did you use after the demonstration at the shareholders' meeting?
I looked at the interlocking directorates. I decided to go after Manufacturer's Hanover Bank, and I forced two of Stevens' highest officials off that bank through a process of undermining the whole credibility and reputation of the bank.
I then went after Avon Company. Again we drew the Avon name heavily into the Stevens controversy so that the chairman of that company resigned from J.P. Stevens, saying that he could no longer allow the good name of Avon to be drawn into the Stevens controversy.
We went after New York Life next and forced the chairman and chief executive officer of Stevens and New York. Life to resign from each other's boards.
Each of these resignations indicated a growing polarization of the power base behind Stevens.
I then had to figure out a way to get to my primary target: Metropolitan Life, which controlled about 45% of Stevens' debt, and had no interlocking directorship [with Stevens].
I discovered that the chief officer of Metropolitan Life not only sat on the board of Sperry but was one of the four people on Sperry's nominating committee for the board of directors. And Sperry had an interlock with Stevens. So we put incredible pressures on Sperry to dump the Stevens director. Finally, at Sperry's annual shareholders' meeting [in September, 1980] we brought in between 600 and 700 people and took that meeting over, which lasted about five hours. The head of Met Life was attending the Sperry meeting, and saw all this happening.
Once the head of Met Life realized what I was up to, that I was directed at Met Life, he immediately - it was on Friday September 26  - wanted a meeting with the head of our union. On Monday, Metropolitan's attorneys called our attorneys and said, "Look, Met Life wants no part of this campaign." I told the attorneys that whatever they did, they had to make sure Metropolitan Pew there was no way out unless there was a settlement with Stevens.
Later that day, Monday, the head of Met Life said he would cancel all of his appointments if he could get a meeting with the president of our union. They met at 8:00 the next morning at the Statler-Hilton, and I was told later that day that negotiations would be going on nonstop through Sunday if necessary.
It was all over. What Met Life had done was, it had indicated that its credit lines [to Stevens] would be completely severed. The agreement [between Stevens and the union] was announced publicly on October 19, 1980.
How applicable is this kind of campaign?
There's great applicability. A company as big as GE [General Electric] has a lot of weaknesses, if you know how to go after them. And General Motors - there are some real weaknesses with General Motors that go far beyond just attacking them in the shareholders' meeting. There's a power structure behind General Motors. The Detroit National Bank, some of the big insurance companies, some of the major banks here in New York, that's what people have to attack.
You can't take on some of these companies - they're so damn big and so impersonal - you can't take them head on. You just can't do it. You've got to look for their weaknesses. Like Stevens. You could have gone after Stevens head on with a boycott and p.r. strategy, and they could have sat that out from now until eternity.
So what you do is you go after their jugular vein. . . In Stevens' case, it was credit they needed very, very badly.
What's the role of the more traditional 'kinds of protests - strikes, slowdowns, consumer boycotts, demonstrations?
In some cases they will be more effective than in 'others. The unfortunate thing is that some of these companies have become so big, particularly multinationals, that they simply see a demonstration or a strike coming in one part of their huge, humongous corporation and they say to the people: "We've left the door open. Come in; sit down; watch TV; have your coffee and doughnuts. Please turn off the lights when you leave:"
William Winpisinger is the president of the International Association of Machinists and Aerospace Workers.
Why are multinationals an object of ' concern? Why should people organize to control them?
The name of the game in this country is power, and they've got it. They have developed absolute market power, immunized by their size from any normal constraints of the system. They can peg profit margins by simply setting prices. This saws one of the legs off the system and therefore the system doesn't work. All the remedies developed by the government allegedly to solve the problem of inflation don't work because they don't really hit the guys that are big enough to insulate themselves from the remedies.
Do you see any trend in the role multinational companies are playing now as opposed to say 10 or 15 years ago?
I think they are taking advantage of the current political climate by trying to launch bigger and better mergers, enlarge their size, enlarge their market share and thereby their market power. And this administration is not intending to enforce the antitrust laws in any meaningful way. That simply gives the rolling stone greater impetus.
With the growth of multinationals, what options are there for labor to confront them or even to hold on to the basic gains labor has won in the past?
Multinationals negate the power of their employees, and their employees' unions, on the same basis that they negate market forces, because once they get that big, they simply engage in job blackmail. They look the employees in the eye and say, "It's either going to be this way, or we'll move the plant. We'll take your job and we'll move it overseas or we'll move it south or we'll move it somewhere else." And given the job market that's been prevalent in this country for nearly a decade, that kind of blackmail is paying off like it never has before. People are scared to death that they will wind up without a job so they cave in to all of the demands that these cats make.
In this kind of climate, , what hope does labor have of exercising influence with these companies?
The only way I know would be for unions to develop and organize around the same lines that multinationals have, which means developing multinational bargaining across multinational lines. This gets into a problem of enormously greater complexity than what the corporations face when they merge companies across national boundaries. We're faced with cultural gaps, cultural differences, that are extremely difficult to ameliorate - that's why the process is so horribly slow.
But there is no other immediate answer that I know of, other than to enforce the antitrust laws and break them up, break their market power. If we can do that, then the employees are equipped once again to deal with them nose-to-nose, as it were.
And enforcing the labor laws, or' having labor law reform, would be another immediate political solution. Unless you can get the law enforced, having all the facts in the world doesn't help you much. _
How would you go about getting antitrust and labor legislation and enforcement on the boards?
The only way you can do it is run the current administration and its ilk out of power and put an administration in that is committed to do something about it as a political proposition. That's the short road; that's the only short road. Anything else is long and involved and inordinately difficult.
You can put all the employees you want on the board of directors, you can put all the union sheeps you want on the board of directors, but unless you got the voting majority, you're not going to get anywhere. That's why I refuse to go on any of these boards. I'm not going to sit there and become a party to my own destruction.
What are the prospects for alliances between labor, consumers, and other activist groups?
Those that we have managed to foster have worked out extremely well, but I have to quickly add that most of my contemporaries in labor are not as interested as I am in forming those kinds of things. They always manage to find somebody that's unwashed in the other part of the coalition, and treat coalitions rather arm's -lengthish. That minimizes our effectiveness. Where those of us who are involved stay involved, like the Citizen/Labor Energy Coalition, hell, it's done wonders. Given the meager start and the humble budget [of CLEC], I think we've made some damn big marks. But that's a rare case where there's across-the-board gut support for it; nothing succeeds without that gut support.
What is the outlook for the remaining years of the Reagan administration?
The outlook, in one word, is dismal, at least until we get rid of this guy, which I think is inevitable after this term is over. I have said for quite a while now that the best organizer the labor movement has in the country today is Ronald Reagan, and barring some miraculous turnaround which I don't anticipate, he and his theories are going to be totally discredited. We can talk now from the additional security of having labor's views and certainly mine given an unexpected bit of credibility by Mr. Stockman's revelations: we were calling it the way it was all along. Sooner or later - and it appears later - all of that is going to come home to roost. The people are still a little bit reluctant to see this guy for what he is, but it's coming.
Once Reagan's out, will there be a much greater chance of gaining control over corporations?
Reagan's certainly one of the giant obstacles, but there are others of course. What the hell, Jimmy Carter didn't do any better than Reagan in that connection.
What we need are some politicians who really understand that we don't have free enterprise in America today. Lee Iacocca [president of Chrysler] said it all when he testified before the Senate on the Chrysler bailout. It was just a flat out statement: "I believe free enterprise died a while back." To me that says it all.
What advice can you give people who want to make giant corporations more accountable?
Put on the political pressure that the voters have. Period. That's what it's going to take. Vote for politicians who are willing to do something about it, and don't give allegiance to any politicians that won't.
Tim Smith is director of the Interfaith Center on Corporate Responsibility, a New York-based organization representing 170 Roman Catholic orders and dioceses and 17 Protestant denominations.
Why have church groups become active on questions of corporate responsibility? Multinational corporations aren't strictly a religious issue per se - what has motivated church groups to become involved?
Churches have gotten involved, first of all, because of a theological commitment to be proper social stewards of the church's wealth and investments. Secondly, because transnational corporations affect people's lives so significantly, the church would be an ostrich with its head in the sand if it didn't try to address those centers of power. Thirdly the church in the United States hears often from its brother and sister churches in Chile, Guatemala, South Africa or the Soviet Union. More often now, the call from these institutions is for us to look at how our-transnational corporations are operating in their countries.
What issues are church groups going to focus on in the next year or so that involve multinational corporations?
In the 1980's churches that are working through the Interfaith Center on Corporate Responsibility have decided to focus on a number of corporate responsibility priorities related to multinational corporations. These are serious issues of our time, where , multinational corporations bear a great responsibility.
The issues include the role of U.S. investment in South Africa, the question of pharmaceutical marketing practices overseas, the question of pesticides and herbicides being sold overseas, particularly those that are banned in the United States, the investment of banks and companies in fascist countries such as Chile, and the ongoing campaign to assure that baby formula manufacturers follow the code of conduct that the World Health Organization has passed.
At home, multinational corporations obviously play an exceptionally important role as well. Among the domestic issues the church has decided to address are questions of plant closings - companies like General Electric are closing plants in California and moving operations to Mexico - occupational safety and health, equal employment opportunity, affirmative action and nuclear power.
What can people do, either individually or in organizations such as the church groups, to try to affect these corporations?
Study the issue, take a stand, and send a message to management.
Increasingly, individuals and organizations are expressing their opinions to transnational corporations, whether it's through consumers writing letters to companies and boycotting products such as Nestles and formerly J.P. Stevens, or whether it's institutions filing shareholder resolutions with companies, appearing at annual meetings, and debating with public investors such as states and universities.
Hundreds of millions of dollars of investments have been withdrawn from banks that continue lending to South Africa. Citibank alone, for instance, has had approximately $100 million of church accounts withdrawn from it because of its position of continuing loans to the South African government. Such actions obviously send a clear message to management.
At the international level, codes of conduct are a wave of the future which I believe deserve public support. By setting guidelines for acceptable norms and standards of conduct, the codes can be picked up by a number of countries and made into national legislation. If there are strong monitoring procedures in the code, and if there are strong national constituencies in specific countries, the international codes of conduct can help pave the way for changes of corporate policies and practices.