[Nasional-m] Big business isn't as big as you think

Ambon nasional-m@polarhome.com
Thu Sep 5 00:00:20 2002


Big business isn't as big as you think

Few multinationals have genuine global ambitions, writes Larry Elliott

If the point of Thatcherism was to make us forget about the state and learn
to love capitalism, the revolution was a failure. Rarely has the corporate
sector had a bigger image problem, in part because the public perception is
that the reforms pushed through by the right made big business more powerful
than ever.
The message from the Johannesburg Earth summit has been coming though loud
and clear: the conference has been hijacked by corporations, which are using
their muscle to prevent the international community from eradicating
poverty, protecting the ozone layer and providing everybody with clean
water. The impression is of a phalanx of Dr Evils masterminding the
destruction of the planet from their hollowed-out volcanoes.
Small business tends to be excluded from this anathema, although why this
should be is not clear. In the West small business is far more likely to
indulge in anti-social behaviour that affects our everyday lives - running
sweat shops, fly-tipping, flouting health and safety regulations, paying low
wages - than big business, which tends to be wary of the hefty legal and
even bigger reputational costs. The fact remains that big business is seen
as an omnipotent enemy of progress, able to steamroller the democratic
process in pursuit of ever-larger profits.
To an extent this cartoon-character stuff is fair game. The shenanigans at
Enron and WorldCom are proof of what can happen when a large enterprise
embarks on the sort of pilfering and fraud that normally goes unnoticed when
it happens at a firm with only a handful of employees. Nevertheless there
are inherent dangers in this caricature of a handful of plutocrats gleefully
grinding the poor into the dirt.
The first is that the development of advanced business capitalism in the
West since the middle of the 18th century has led to stupendous increases in
living standards. The effect the development of capitalism has had on living
standards is clear from one figure: in the eight centuries from 1000 to
1820, per capita incomes in western Europe rose by 0.15% a year on average;
since then they have increased by 1.5% a year on average - 10 times as fast.
 There is another danger, and it is just as important. The emphasis on the
perfidiousness of big business makes it look more powerful than it really
is, breeding an atmosphere of hopelessness and political quietism. If
multinational corporations really are stronger than nation states, all we
can do is sit back and wait.
As an Economic and Social Research Council (ESRC) study out this week shows,
we are in danger not just of underestimating the good that business can do
but of overestimating just how mighty multinationals have become. Professor
Alan Rugman ofIndiana University and Templeton College, Oxford, concludes
that the vast majority of multinationals are not pursuing a global strategy,
and that only a handful, such as Nestle and Unilever, cut it as genuine
global players. Many are struggling to make decent profits from their
foreign operations and there is a trend towards "de-globalisa tion", in
which even the world's biggest companies concentrate on their tried and
trusted markets at home.
"While there is a pervasive view that markets and firms are becoming
increasingly international, one of the key findings of this study is that
many of the world's largest multinational enterprises are not particularly
good at managing their international operations," Rugman says. About a sixth
of the 214 firms the study looked at lost money in 1998.
Far from being rugged and independent, business relies on the legal,
institutional and financial support only government can provide. After
September 11 we didn't hear much from airline companies about the virtues of
rolling back the boundaries of the state; they wanted government subsidies -
and lots of them - to stave off bankruptcy.
Within this relationship it is only to be expected that business will press
for concession and push at the boundaries; that's what capitalism does. Yet
when governments take a stand, imposing new taxes or cracking down on
corporate fraud, big business doesn't close down and move to a new country:
it adapts, concedes, gets on with life. The ability of capitalism to oper
ate under almost any regime is one of its defining characteristics.
What does this tell us? First, that the term "globalisation" needs more
definition. Global integration is more advanced in some sectors than others.
The financial sector is where the linkages are most complete but where the
relationship between business and government is most short-termist. Money
can leave a country more rapidly than machinery. Reform efforts are most
pressing in this area.
Second, the experience of the export-driven economies of East Asia is that
it is possible to have a more integrated global economy driven by states
that have defined domestic goals in mind.
Finally, the problems of globalisation have as much to do with supine
political leaders as with the rapacity of corporations. If global leaders
were to agree on a new blueprint for the global economy embracing human
rights, the environment, patents and trade, business would whinge like crazy
but would have no choice but to comply. The real issue is whether there is
sufficient political will to act. Sadly, that has been a commodity in short
supply.

The Guardian Weekly 5-9-2002, page 11