The discussion of economic power in the world economy revolves around several axes. One of the key units through which international economic power is wielded is through the multi-national corporations of the competing states. To analyze the strengths of the different states it is useful to compare the proportion of the biggest (1) multi-nationals linked […]
The discussion of economic power in the world economy revolves around several axes. One of the key units through which international economic power is wielded is through the multi-national corporations of the competing states. To analyze the strengths of the different states it is useful to compare the proportion of the biggest (1) multi-nationals linked to each state (2).
The ‘general power’ configuration measured by the number and percentage of MNC’s linked to different states needs to be refined by looking at the particular sub-sector in which the different national MNC’s are concentrated. Our hypothesis is that different country MNC’s concentrate power in different sectors. Power is not homogeneous across sectors – it is increasingly dispersed between the competing major power blocs. While a degree of dispersion by specialization reveals competing and complementary relations among the imperial powers, it is hypothesized that one power center – the US – has greater domination over more sectors than the other power blocs.
In determining the 500 largest MNC’s we rely on the criteria and calculations published in the Financial Times (Special Report FT Global 500), May 27, 2004). The companies are ranked on the basis of their market capitalization, the stock market value of a company. This is determined by multiplying the share price by the number of stocks issued. Companies with large state or family holdings are excluded. The day of calculation was March 25, 2004.
Dominant Economic Power: The 500 Biggest MNCs
The US remains the dominant power in terms of the highest number and percentage of MNCs among the top 500 with 227 (45%), followed by Western Europe with 141 (28%), Asia with 92 (18%). These three regional power blocs control 91% of the biggest MNC’s in the world. Overwhelmingly «globalization» can be seen as a derivative of the power of the MNC’s based in these power blocs to move capital, control trade, credit, financing and entertainment. Almost three quarters (73%) of big corporate institutions are located in Euro-US sphere of power. While big Asian MNCs are increasingly present and a possible challenge in the proximate decades, in the short to medium run the US-Euro economic axis still predominates. The boom in China and India and the economic recovery of Japan reflect the growth of endogenous capitalism and the expansion and conquest by Euro-US MNCs of economic markets. Latin America, the Middle East and Africa have a total of 11 among the top 500 MNCs. In Latin America only Brazil and Mexico have world class MNCs while Africa has zero and in the Middle East Saudi Arabia controls 4 of the 6 MNCs Russia following the catastrophic collapse with the transition to pillage capitalism has only 7 MNCs. The continents and countries which have the lowest development of world class MNCs are precisely the countries which have been dominated by Euro-US MNCs and their imperial states. The incapacity to accumulate endogenous capital under client rulers servicing US-Euro MNCs is a leading cause of the continuing pillage of resources, transfers of earnings to the leading banks (among the 500), and general dis-accumulation process. The few big MNCs, which appear in Russia and Latin America, are largely privatized state firms resulting from public savings and investment by previous statist regimes able to limit the presence of Euro-US MNC’s.
A closer examination of the ‘peak’ of the giant MNC’s actually illustrates the greater concentration of power of the US.
Among the top 10 biggest MNCs, 80% are US and 20% are European. Among the top 20%, 75% are US, 20% are European and 5% are Japanese. Among the top 50 MNCs, 60% are US, 32% are European, 6% are Japanese and 5% are other. The greatest concentration of US power is among the biggest MNCs while greater competition sets in as one moves to the lower tiers.
The US has the biggest MNCs in industry (General Electric), oil and gas (Exxon-Mobil), software and computer services (Microsoft), pharmaceuticals (Pfizer), banking (Citicorp), retailers (Walmart), insurance (American International Group), and information technology hardware (Intel). The total capitalization of these giant MNCs is one trillion, nine hundred and seventy-nine billion dollars.
Those who write of the «decline» of the US Empire have certainly ignored the consolidated world power of the US top eight MNC’s. What is called «globalization» is in reality the extreme concentration and extension of US empire, or at least, a US-European empire, which is complemented by the gradual emergence of Asian MNCs.
Russian MNCs , almost exclusively located in natural resources, are a special case: they result from the pillage and theft of large scale state enterprises which were largely integrated in the domestic economy. Today the Russian MNCs largely «service» and supply Euro-US MNCs, are poorly integrated with the Russian state and have been operated by expatriate oligarchs in England, Israel and elsewhere.
Canadian giant MNCs are largely in banking, natural resources and information technology. They are linked, in part, to the US MNCs and operate with little direct state involvement in ‘empire building’ except to follow US direction.
Beyond the top hundred firms however, the preponderance of US MNCs is narrowed and Euro-Asian MNCs have become a real challenge. Beyond the top 100 firms, European and Asian MNCs become important operators in the imperial system, moving beyond their traditional regional boundaries, and selectively entering into and competing with US MNCs within their domestic economy.
Concentrated and Shared Dominance
Competition and complementarity in empire building between the US, Euroope and Asian MNCs is evident when we turn to specific economic sectors. Examining the top ten firms in several key economic sectors we find US MNC «monopolization», «competition» and «displacement».
Retail Trade
US retail MNCs are dominant among the top 10, 80% of the biggest firms. This is not surprising given the fact that the US economy is largely based on consumer spending, speculative bubbles and high levels of indebtedness. All leading US retail MNCs began by dominate the local market, accumulating capital on the basis of intense exploitation of low-paid, non-unionized labor and then moved overseas where they reproduce their practices. Europe and Asia’s retail trade up until recently was based on family-owned small/medium size firms.
Information Technology
The US dominates with 80% of the top ten, followed by Europe, in part as a result of early state subsidies via military spending, the Y-2000 scam (the «end of the world scenario» which pumped tens of billions into the emerging IT enterprises), and the IT speculative bubble of the 1990’s.
Mass Media and Entertainment
US MNCs dominate the world mass media and entertainment sector. Almost 80% of the top MNCs (11 of 14) is controlled by US capital. With the dismantling of public media in the early part of the 20th century and the monopolization of radio, television and film, the US giants «conglomerized» buying out or bankrupting local newspapers, music and cultural firms, before repeating the pattern world wide. The growth of concentrated US media and entertainment conglomerates was achieved via favorable state intervention, «de-regulation» and promotion, as media and entertainment served as an unofficial overt and covert propaganda arm of US imperial conquests, wars, occupation and penetration.
Military/Industrial Complex
US MNCs are leaders in the war-related empire building military industries. Of the top 11 giant firms among the top 500, nine are US and two are European .Militarism fueled US industrial expansion for the last 65 years, lifting the US from the Great Depression of the 1930’s but absorbing and wasting trillions of state financing and thus severely weakening the US presence among non-military industrial activity (as we will see below).
Software/Computer Services
The US MNCs dominate the software and computer service sector, with 6 of the 10 biggest firms. However the supremacy of the US is being challenged by Japan and Europe which each have two of the top 10 firms. The anti-monopoly challenge launched from Europe, the bursting of the IT bubble and the greater state funding of research and development has led to intense inter-imperial competition as well as fusions, buyouts and «unfair competitor practices».
Banking
US finance and banking capital has grown to become a leading force in the world economy. US multi-national banks make up 60% of the top ten banks in the world, followed by Europe with 30% and Japan with 10%. US banking has grown via its debt holdings in Latin America, Asia and Africa, converting debt holdings in equities via the neo-liberal policies of privatization and deregulation of financial markets. US bonds have also benefited disproportionately by facilitating the transfer of hundreds of billions of illicit funds by corrupt rulers, international criminals and tax evading business leaders, especially from Latin America. Big US overseas banks play a major role in shaping US imperial state policy via the international financial institutions (IFI) promoting neo-liberalism, financial de-regulation, class-based austerity programs and foreign debt collection. On a lesser scale, but in the same direction, European banking giants influence the policies of the European Union. More often, however, European multi-national banks act in unison with USbanks via the «Paris Club» in pursuit of the same goals of debt collection via common policies.
The European Challenge: Telecoms, Oil and Gas, Insurance, Pharmaceuticals and Manufacturing
Europe is the leader in telecoms with 40% of the top ten MCNs followed by the US and Asia with 30%. Similar patterns are found in insurance, Europe has 50% of the largest MNCs, followed by 40% for the US and 10% for Japan. In gas and oil the US and Europe both have four of the ten top MNCs followed by one each for Russia and Brazil. The same «parity» exists among pharmaceuticals with the US and Europe equally dominating the top ten MNCs.
In electronics and electrical equipment, the Japanese MNC in particular and Asian in general control 70% of the largest producers, Europe 20% and the US has only one MNC in the top ten.
The clearest expression of inter-imperialist competition is found in both light and heavy manufacturing including metals, transport, chemicals, forestry and electronics. Among the largest light manufacturing firms US MNCs represent 44%, European 48% and Japan 8%. In «heavy manufacturing» among the 100 largest firms, 32% are US, 30% are European, 22% are Japanese, 7% are other Asian and the rest are spread among 5 other countries. The same ‘equality’ of presence is found in the booming ‘personal care and cosmetics’ sector where the US and Europe each have 33% of the largest MNC followed by Japan with 11%.
US empire is based on economic strength and relative weakness. The US is strongest in IT, finance and the mass media, and weaker in manufacturing, insurance, telecoms and electronics. The US empire is ‘competitive’ in pharmaceuticals, and oil and gas.
It is a mistake to refer to the US as the «global power» for its has strong competitors which have surpassed or compete favorable with the US in key energy and productive sectors. While the US dominates the «visible» and «consumer» sectors (mass media and retail stores) it is relatively weaker in manufacturing, telecoms and insurance. US power is built on services not in the production of tangible civilian goods. Without the heavily subsidized military-industrial MNC, US would have even less of a presence in industry. Moreover the US-based manufacturing economy has been severely weakened by the expansion of US MNC overseas, particularly to China. With their economic activities abroad engaged in empire building, the MNC maintain their home base in the US, thus maintaining powerful control over the direction, policies and personnel in the state and government.
The notion that Europe can be confined to a ‘regional’ power, as argued in the Wolfowitz-Perle doctrine – was totally out of touch with the overwhelming reality of Europe as a global imperial competitor of the US, with a solid manufacturing, financial and telecommunications power base.
Moreover the most recent data suggest that the US is gradually losing dominance. The data for 2004 show that 30 US MNC fell out of the top 500, while there were only 16 new entrants, for a net loss of 14 – a 5% decline. Europe more or less stayed the same, but Japan and the rest of Asia had a net increase of 14 between 2003-2004 – an increase of nearly 20%.
Two important caveats need to be taken into account. US decline in the percentage of MNCs relative to Europe and Asia is in part compensated for by the fact the the MNC in Europe are dispersed among several countries, and despite the bonds of the EU do not act as a unified body. The same is true with regard to Asia. Secondly the US state through the costly use of its military and secret police intervention can gain economic advantage even as its MNCs decline and face stiff competition.
The competition and disagreements between European politicians and Washington over trade policy and the Iraq War is subordinated to their long-term collaboration. Moreover part of the political conflicts revolves around the Zionist ideologues in the Pentagon who have imposed Mid East policy and global warfare.
Against these ideologically induced conflicts, European and US capital have become increasingly inter-penetrated. The Euro-US economy generates $2.5 trillion USD in total commercial sales employing 12 million workers on both sides (Financial Times, June 9, 2004). In 2003 US MNCs invested $87 billion in Europe, an increase of 31% over 2002. In the same year European MNCs invested $37 billion in the US, an increase of 42% over 2002. The high levels of trade and investment between the two biggest imperialist centers demonstrate that the conflicts and rivalries are still less important than their common economic interests. Nevertheless, despite these structural affinities, the unilateralist, Israel First crowd has and will continue to cause severe strain in the relationship.
The Israel-Palestine conflict, the Iraq War, and the Zionist-Pentagon plans for new Middle East conflicts (Iran, Syria and Northern Iraq (Kurds)) will certainly create new tensions between the two imperial centers. The European empire with its predominantly «trader-investment-market» diplomatic strategy faces a highly militarist, colonial US strategy. Europe proposes multi-lateral, consultative, joint sharing style of imperialism while Washington looks to unilateral action and monopolization of rule and imperial plunder. The Europeans look toward joint partnership in the Middle East with Arabs and Israeli elites; Washington, influenced by the Zionists prioritizes an exclusive relation with Israel to the exclusion of Europe and Arab rulers…except as submissive clients. In this context we can expect deepening structural links between the imperial MNC and imperial regimes, continued competition over market shares, and political conflict provoked by the Zionist extremists in Washington and their mentors in Tel Aviv.
Conclusion
The imperial policies adopted by Washington are a direct response to the power and centrality of the biggest MNCs in the US economy. Free trade agreements, IMF and World Bank policies, privatizations, lowering tariff barriers, establishing over 180 military bases abroad in over 130 countries are responses to the structural imperatives of the US economy and more particularly to the biggest US MNCs who operate throughout the world. Imperialism is not a ‘policy’, a ‘conspiracy’ or a product of any singly administration but a determining economic structural reality.
However the way in which these structural imperatives are realized, or better still the policies based on these imperial economic interests are formulated by decision makers in Washington and implemented via the state apparatus.
Most of the key policies in pursuit of imperial interests are not made via broad public debate, nor are the imperial interests stated as such. A small circle of policy-makers, mostly non-elected officials, who act behind closed doors, plan imperial policies. The public is later embellished with the ritual rhetoric of «freedom», «democracy» and so on. Structural determination of strategic interests is compatible with (if not necessitated by) «closed doors». Thus the argument counterposing «conspiracy theorists» to structural determinations is a false distinction. Structural and «conspiratorial» determinants operate on different if not compatible levels. Structural economic factors,like multi-national corporations, establish the general framework of US policy, while the policymakers elaborate the policies to realize their interests. The elaboration is in large part out of the general public sight…hence can be conceived of as a «conspiracy», but no behind the backs of the MNCs. Moreover there are moments when particular policymakers can carve out a degree of independence from particular MNCs in specific regions and pursue their own ideological agenda even at the cost of the MNCs.
The most striking example of this exceptional circumstance is the behavior of sectors of the US state apparatus with relation to the Middle East during the Bush presidency. An influential group of US Zionists, closely allied with Israel and having strong loyalties to the Israeli state formulated a strategy of permanent war in the Middle East based on the use of unilateral US military power to enhance the power of the Israeli state.
Zionist policymakers targeted several of the oil-producing countries who were loosely allied with and provided exorbitant profits for US MNCs, purchased US Treasury notes to balance the US current account deficit and had major ties with US financial institutions. Moreover the Zionist policymakers, exacerbated the political and diplomatic isolation of the US in the world (Europe, Asia, Africa, Middle East) and created oil price volatility and huge budget deficits. In theory and in their eyes the Zionists are not opposed to US MNCs, nor are they against forcefully building US imperial power, but by subordinating and harnessing US imperial power to Israeli Middle Eastern interests they effectively, in practice, overrode the structural imperatives of the US MNCs.
This is clearly the case in the launching of the Iraq war – to destroy Iraq’s economy, the infrastructure was destroyed and pillaged, to destroy Iraq’s national unity, religious and ethnic groups were politicized and polarized. The result – Israeli power in the Middle East was enhanced and it moved toward new targets – Syria was boycotted by the US, Iran has become a target for attack, Saudi Arabia has been the focus of fierce ideological critiques to the advantage of Israeli interests. As an unintended result, the Empire has become bogged down in a prolonged losing colonial war, the budget and trade deficit grows geometrically, the entire Middle East has been destabilized, the pro-Israel animus toward Muslims has awakened hundreds of millions into enemies of the US economic and military presence. Strategically the US military has been stretched to its capacity to defend or expand the empire. Conscription will polarize the country and weaken support for imperial politics. By any objective measure, the Zionist attempt to fuse US empire building with enhancing Israeli power, by inventing a joint US-Israeli Middle East power bloc has been a gross failure – in a word it has eroded imperial power.
This is a clear example of how policy makers have acted not only behind the backs of the public but behind the backs of the MNCs and against the structural imperatives of empire. Clearly there is not always a direct relation between structural imperatives of empire and the effective realization of MNC interests. Ideological factors can lead policymakers to deviate from prioritizing MNC interests in favor of other loyalties, including other state interests in some rare cases, as we have seen today in the case of US Mid East policy. No doubt at some point in the not too distant future the Zionist policies may provoke a ‘correction’ in US imperial policymaking. Already the state is divided between pro- and anti-Zionists, between Israel Firsters and Empire builders. To the degree that Israeli Middle Eastern ambitions jeopardize the greater interests of the biggest US MNCs there is likely to be a major political showdown – with the Israeli power bloc in the US mobilizing all their resources to pressure Congress, the Parties and the President to back Israeli ambitions against the MNCs and their spokespeople’s attempt to focus on the «bigger picture» of inter-imperialist competition, and overextended military and a hostile Middle East investment climate.
Ultimately, the test is whether powerful economic structural imperatives based on the massive presence of US MNCs in the world economy will be a match for a politically powerful fraction of Jewish capital located in leading economic sectors like the mass media and finance. Ultimately the structural imperatives of empire building will predominate over the parochial interests of the Israel First crowd, but it may have to suffer through a profound domestic and international crisis before it is resolved.
In conclusion, delineating the economic strength and relative weaknesses of the US MNCs helps us to partially understand imperial politics; nevertheless it is necessary to analyze the political institutional sphere through which imperial policies are elaborated and pursued. While the imperial state represents the MNCs it does so in its own manner and occasionally the policies pursued may sacrifice one set of imperial interests for another.
July 2004