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Multinationals and the - A. Game

"NATIONAL INTERESTS” OR “CLASS in Australia, claims that with the rise of the INTERESTS?” (mostly American) multinational w hich is “ responsible to no one” , "w hat is in In the last few years a substantial number of question is the survival of the nation s ta te .....” marxist analyses of post- have (2). As such analyses have been reflected in located the dominant contradiction of the strategies of working class and left political as one between multinational (or organisations it is important to demonstrate transnational) and the nation that they are based on concepts derived from state. While there are variations on the theme, bourgeois liberal frameworks, and that the general conception is of a “power consequently they lead to inadequate struggle” between multinational corporations strategies for a revolutionary movement. To and nation states. Thus in contemporary put it most bluntly, there is a significant trend analyses of Australian capitalism we find towards various forms of which statements such as: have the effect of concealing class conflict and burying working class interests by proposing "The problem of building up the is alliances with the national bourgeoisie, or that with multinationals such nation states can defence of one’s own state, against foreign or exercise only a limited on local international capital. Wheelwright's statement branches of such companies." (1) that "there are conflicts between the interests of international corporations and the national Wheelwright, who has made the most interest” (op. cit. p. 60) is not uncommon, and extensive analyses of international capitalism a frequent solution offered is that “Australia” should be put in the hands of Australian Ann Game is a post-graduate research student in ownership rather than being owned by Adelaide. America or . (3) 18 MULTINATIONALS AND THE NATION STATE

One of these analyses of multinational between these firms, this is seen as corporations does actually admit that an qualitatively different to “imperialist state explanation of the nature of “national interests rivalries at the end of the nineteenth century” can be provided only after a discussion of the (my emphasis). This view rests on the relationships between class and state and assumption that "the multinational between class and imperialism”; butthen goes corporation has emerged as a more powerful on to say that it is outside the scope of the entity than the nation state. The new paper; that “national interests” will be are the giant corporations ....” (8) The political assumed, as in bourgeois , “without conclusions of such a view are the same as analysing the real class dimension.” (4) It is to those of the ultra-imperialist position - that is, be argued here that the nature of one that claims there are no contradictions inter-imperialist relations can only be grasped between capitalist states, the only significant in the context of those questions neglected by contradiction being that between imperialism Marinelli and Somaini. Misunderstandings of and the “third world”. A particular variation of these relations have arisen as a result of the this is super-imperialism. The argument in this meaning given to such concepts as the case is that as a result of the dominance of US “multinational corporation”, “national capital, all capitalist states are united under interests”, and “nation state” in a number of the and domination of the US recent analyses. It is necessary to break with super-state. (9) Barratt Brown claim s that in ideological concepts and reformulate the the light of the fact that rivalry between question in class terms. In these terms an capitalist nation states has been contained in analysis of inter-imperialist contradictions the face of competition from the communist w ould notask the question “w hat can or can’t a world and national liberation movements (1)) state do in the face of large multinational and that firms are “now transnational ”, Sweezy corporations?” Rather, the focus would be on is correct in seeing the only possible the effect that the internationalisation of revolutionary initiative coming from the capital has on the relations between impoverished masses in underdeveloped imperialist bourgeoisies, and consequently on (See Baran and Sweezy Monopoly the role of the nation and state in Capital). Such positions ignore the inter-imperialist relations. contradictions within and between imperialist bourgeoisies and the importance of class MULTINATIONAL CORPORATIONS struggle in metropolitan countries. The view The key features of the post 2 that the Leninist conception of phase of capitalism that are noted by most inter-imperialist rivalry (rivalry between states marxist commentators, but variously in defence of certain fractions of capital) has interpreted are, firstly, the massive increase in been superseded with the emergence of direct foreign investment (thatis the setting up transnational corporations is based on a of manufacturing plants in other countries, misunderstanding of the relation between rather than the take-over of shares in existing capital and the state, and leads to reformism in local enterprises) (5) and secondly, that this practice. (11) That is, if the rise of the investment is taking place in other advanced multinational corporation has in some sense capitalist countries rather than in meant the demise of national states, the underdeveloped countries. (6) question of state power, central to revolutionary strategy, becomes obscured. The significance of direct foreign (This is to be taken up again later). investment inside other metropolitan countries (that is, centres of im perialism ) is, The question of the displacement of direct however, often missed; particularly when it is foreign investment towards metropolitan expressed ih terms of the "rise of the centres has similarly been misinterpreted by multinational corporation”. The focus on those who hold an ultra-imperialist position. transnational or multinational corporations as (12) Those advanced capitalist countries the characteristic feature of this phase of where US capital holds dominant position capitalism h§s led “neo-marxists” such as become, in their schema, quasi-colonies, Barratt Browh to claim that there is a need to analgous to peripheral countries: “a line of revise the traditional marxist theories of continuity is thus drawn between the states of imperialism (Lenin's Imperialism specifically). the Third World and the smaller industrial While admitting that there is competition e.g. Britain.” (13) That is, the “power” AUSTRALIAN LEFT REVIEW SEPTEMBER, 1975 19

of metropolitan states is being destroyed Mao’s warning against collaboration with either under the domination of large US sections of a ruling class in semi-colonial capital, or the US , or “international” countries is even more vital in the case of capital “above” states. (14) The strategy that imperialist countries. suggests itself in the light of this view is an The crucial point with regard to alliance with the national bourgeoisie against mulTmatToTTaTgorporatlons is~fo understand US imperialism. Such strategies are based on that they are effects of the concentration and misunderstandings of the relation between US processes of capital. 3h a capital and the bourgeoisies within these worTiJwicfe scale. That is. they are sim ply the formations. As Mandel has pointed out, the ihsffiuFionaTTorm of this stage of monopoly percentage increase in direct. foreign capitaliSmTThey don’t signify thaTcapitalism investment inside other metropoles,Contrary hasTJuaJjtatively changed, butTather, are^the to this view, signifies intensification of necessary result of the basic dynamics ©f inter-imperialist competition. (15) capitalist development (16) which exist It is interesting to compare strategies for independent' of multinational corporations. “national independence” of, for example, Martinelli and Somaini, for example, assume Australia, put forward by some “maoist” that because the “multinational corporation groups, with Mao’s view on the same question embodies the processes of concentration and in the case of semi-colonial countries: centralisation ....” (op. cit. p. 69), it issufficient to focus attention on firms. On the contrary, it "When imperialism launches a war of is precisely because they are the institutional aggression against such a , all its effects of a process that the changing various classes can temporarily unite in a structure of global production and form of the national war against imperialism .... accumulation of capital, and consequent class “When imperialism carries on its relations can only partially be understood by oppression not by war, but by milder looking at the multinational corporations and means - political, economic and cultural - their activities. the ruling classes in semi colonial THE MULTINATIONAL CORPORATION AND countries capitulate to imperialism, and THE NATION STATE the two form an alliance for the joint oppression of the masses of the In order to grasp the nature of inter­ imperialist contradictions, it is not only necessary to sh ift focus from the of Mao Tse-tung On Contradiction multinational corporations to modifications in (F.L.P. Peking 1967, p. 30) class relations, but also to understand the role 20 MULTINATIONALS AND THE NATION STATE of the state. Firstly, it is important to power, or countervailing power, rests on the demonstrate the conception of the state pluralist assumption that power is a given implied in the formulation of “a powerstruggle quantity in a for which a number of between multinational corporations and autonomous groups or individuals compete. nation states.” (17) The gaining of some of his power by one group means its subtraction from another._ The traditional liberal view of has been one of free, separate nation A common theme in analyses of states embodying national interests, international firms is the flexibility of these competing with each other for “power”. firms, their ability to shift production units Bourgeois political scientists and economists wherever it suits them, the consequence of have found it necessary to modify some of which, it is argued, is an “abdication of their assumptions with the emergence of absolute state power.” (23) This particular multinational corporations. In general they article goes on to claim that “toTFi'e extent that have added the international corporation as foreign capital has penetrated the national another individual actor on the international economic space the state loses power to arena competing for “power”. In this new defend its own capital.” (24) While it is model the international corporation has an certainly true that states no longer necessarily homogeneity and equivalence with nation cfefend their “own capital”, to speak of the states. It is precisely this framework that some state losing power v ,-a-vis some section of marxists have employed recently. capital is misleading. Similarly Martinelli and Somaini argue that because multinationals Robin Murray for example, claims that two control financial flows, technology etc. and traditional assumptions have to be replaced; can make arbitrary choices their activity firstly, that there is an identity of interests generates “national interest conflicts.” (25) between a firm and its state, and secondly, that That fs, nation states, supposedly being the state has power to control the activities of powerless to control “foreign” firms, are less its firms, What is needed instead is “a model capable of acting in the “national interest" which contains international firms, nation (whether it be the interest of national capital, states, and international institutions as or “the people” at large). Thus, the general primary units” (as opposed to a model that has picture that emerges from these accounts is either only nation states, or international firms that these firms in some sense by-pass, or are as primary international actors). (18) Thus we above nation states and weaken them, find various marxists speaking in termssimilar suggesting (although never explicitly) that the to those of the liberal international relations national state has in some way to be defended fram ew orks: fo r exam ple, “ pow er is the driving against international or foreign capital. force of multinational corporations and their success lies in their ‘bargaining power’ with In order to demonstrate that the main contradictions on an international level today host nation states.” (19) Goldstein speaks of cannot be understood as one between “public power versus private power”, the multinationals and nation states it is necessary “ managers” of the former being to outline briefly the marxist conception of “accountable”, the latter, not. (20) Similar power and theory of the capitalist state. assumptions are involved when Wheelwright, followed by Catley and McFarlane, speak of MARXIST THEORY OF THE STATE “multinational corporations being responsible to no one but their own headquarters.” (21) Marxist explanations of international The other side of this coin is of course the conflicts are located in the field of suggestion that multinationals can be put contradictions between classes, rather than under control of “the people” via conflicts of interest between nation states. It is nationalisation Although it is not the main not, however, sufficient to leave the matter point to be taken up here, the notion of here, for the question must be asked: what role “accountability to the people” falls entirely does the state play in “international relations” within the liberal bourgeois notion of or more precisely, inter-imperialist conflicts? . Goldstein also refers to a “zero- In o-der to establish this it is necessary to look sum struggle for power of managers of at the function of the state in capitalist multinational corporations with managers of . It is important to note that we are state power.” (22) The concept of zero-sum now looking at the national state apparatus AUSTRALIAN LEFT REVIEW SEPTEMBER, 1975 21 rather than the nation state. The use of the of the state is being threatened by concept "nation state" frequently implies that multinational corporations. This assumes that the nation and the state are one and the power is actually located in the institutions of same, the consequence of this being the the state. This strictly speaking is notthecase; suggestion that there is a national interest power in capitalist societies means class transcending class interests. power, and state power is a particular aspect of_ The marxist conception of the state is that it the power of the ruling class. The state itself has a function of "holding together” societies, has no “power” - rather it is where ruling class such as capitalist societies, that are power is exercised. The political domination fragmented by class contradictions. (26) and power of the capitalist class is realised When understood in the context of a society through the relatively autonomous state divided into classes, the state’s role as a factor apparatus. It is because of the relative of order and regulation, necessarily means the autonomy of this apparatus that the state reproduction of the particular social relations appears to have power itself over society. on which capitalism is based. In the words of Difficulties with state power in the analyses Engels: discussed above, have partially arisen out of a confusion of state power with state “The m odern state is only the organisation intervention, particularly state intervention on which bourgeois society creates in order behalf of “national” fractions of capital. That to maintain the general external is, when the state is seen to act on behalf of conditions of the capitalist mode of "foreign” capital as opposed to national production against attacks by workers as fractions it is frequently expressed in terms of well as individual capitalists.” loss of power of the state to act in the national “interest.” (Anti Duhring) Bill Warren, in arguing against the Not only is the state essential to capitalist assumption that multinationals are societies because they are based on threatening the power of the state contradictions and irreconcilable class demonstrates precisely the same confusion. antagonisms, but these also make intelligible (27) He argues that the power of nation states the appearance of the state as standing above vis-a-vis large firms is in fact greater now, and society. increasing, on the grounds that the processes “In order that these antagonisms and of concentration and centralisation of capital classes with conflicting Economic have frequently been consequences of interests might not consume themselves deliberate state policies. What he quite and society in a fruitless struggle it correctly appears to be emphasising is the became necessary to have a power increasing need for state intervention with the seemingly standing above society that increasing internationalisation of capital. (28) w ould alleviate c o n flic t.....” This, however, is notaquestion of the increase or decrease of state power but rather a (Engels, Origin of the Family, Private Property question of identifying the sections of the and the State, M.E.S.W . (International 1969) capitalist class in whose interests the state is p. 586) intervening. The apparent separateness of the state is not to be understood in the sense of either it being It is now clear that it makes little sense to a neutral umpire between contending class speak of multinationals (in other words, interests or having some interests of its own. fractions of capital) threatening the power of This appearance is made necessary in order nation states, or possibly eliminating them that a class society be reproduced; that is, the when state power is the expression of class economic and political dominance of the power, and the reproduction of capital is capitalist class be maintained. Without the dependent on the state. Such an approach state apparatus the antagonistic nature of the evades the task of class analysis, particularly relations of production would be laid bare, and an analysis of the different fractions of capital hence “society" threatened by sharper class of which the bourgeoisie is comprised. struggle. Confusion has arisen at this point because Now we can return to the question of state with the internationalisation of capital it is not power, particularly the notion that the power necessarily “national” fractions which will be 22 MULTINATIONALS AND THE NATION STATE

defended by the state. That is, the general political domination of the capitalist class. interest of capital may not correspond to the This domination cannot be overcome unless particular interests of national fractions of the the state apparatus itselt is smashed, or as bourgeoisie. (29) Marx and Engels put it: Competing fractions of capital are possibly “The working class cannot simply lay hold interested in eliminating each other, but not of the ready made state machinery and the state apparatus. For all capitals operating wield it for its own purposes.” (31) within a particular society require the state to There are two main political conclusions to play a dominant part in reproducing the social be drawn from the above. Firstly, there is a conditions necessary for capitalist need for proletarian internationalism as production. And, it must be noted, that despite against “social-”. Secondly, the competition between sections of capital, all is still the bourgeoisie and sections have interests in common such as its state; and the struggle against them can containing working class struggle, raising the only be led by a class conscious labor rate of profit, etc. National state intervention is movement. a pre-requisite for the necessary international expansion of capital. And here indeed there is FOOTNOTES a contradiction: the increasing importance of intervention of the national state as a condition 1. B. McFarlane & R. Catley, From Tweedledum to of capital expanding internationally. This is an Tweedledee, A & NZ Book Company, Sydney, 1974, p. 6. expression of the general contradiction of 2. E.L. Wheelwright. Radical Political , capitalism, between the tendency towards - ANZ, Sydney, 1974, pp. 36-37. socialisation of the productive process and the private nature of appropriation, which is 3. McFarlane and Catley speak of the Labor dependent upon the intervention of the ’s inability to respond adequately to national state. Expressing the contradiction in the “contradiction between the growing this way is not at all the same as saying that nationalism of the Australian people .... and the there is a struggle between two entities, de facto economic and political power of transnational corporations." (op. cit. p. 5). multinational corporations and nation states. There is no attempt here to identify what "the The political consequences are quite different. Australian people" consists of, or whose CONCLUSION interests “their" nationalism serves. 4. Alberto Martinelli, Eugenio Somaini, "Nation The main point of the foregoing has been to States and Multinational Corporations”, argue against various forms of nationalism, Kapitalistate I, 1973, p. 69. such as that promoted by “maoists", that come from seeing the foreign orinternational nature 5. See e.g. J. Dunning, Studies in International Investment, Allen & Unwin, 1970, for figures on of capital as the characteristic that makes it proportionate increase in US investment abroad “the enemy”. The basic antagonistic relations since the war. of exploitation on which capitalism is based have not changed: it is the form that changes in 6. US investments in quadrupled 1957-67, different pnases of imperialism. Thus, whereas they not quite doubled in Canada, and the role of the state in capitalist society has not hardly increased in . J. Dunning (ed ), The Multinational Enterprise, Allen & changed either. The basic tenets of marxism- Unwin, 1971, points out direct foreign leninism are also still valid. Whether the investment constitutes 75 per cent of capital argument be that the state is the “tool” of exported now, as against 10 per cent before foreign or international capital, or that its 1914. power is being threatened, the theoretical 7. M. Barratt Brown, Essays on Imperialism, mistakes and political consequences are the Spokesman, 1972, p. 39. same. Strategically these new theories lead to reformism. The national state in these 8. Loc. cit. schemas is either to be defended against 9 See e.g. P. Sweezy, P. Baran, Monopoly Captial, foreign capital, or taken over intact by the Penguin, 1968; H. Magdoff, The Age of people (the working class in alliance with Imperialism, Monthly Review, 1969; Sweezy and fractions of national capital) out of the hands Magdoff in Monthly Review; M. Nicolaus, "USA: of the foreign monopolies. (30) Such notions The Universal Contradiction". NLR, No 59 ignore the role of the state in maintaining the 1970. MULTINATIONALS AND THE NATION STATE 23

10. This is Sweezy's most recent position. See 18. In Dunning (ed.) The Multinational Enterprise, “Imperialism in the Seventies”, Monthly p. 266. Previous reference has been made to Review, Vol. 23. No. 10, 1972, pp. 2-5. Also June Barratt Brown’s suggestion that in fact and Oct. 1971. Previously he took the more multinational corporations have become the commonly held ultra-imperialist view that dominant factors in international relations, imperialism is united under US hegemony. whereas nation states were previously. The While it is axiomatic that revolutionary issue here is not which of these entities has won movements are the threat to capitalism (the the struggle, but rather, the framework that sees victories in Indo- being the most recent them as equivalent (but not necessarily equal) testimony to this) neither this nor the fact that entities in a struggle. Barratt Brown is by no one capitalist country may have hegemony at a means alone in his opinion - cf. Kindleberger, particular time can lead to a peaceful unity of Hymer, Sampson, Vernon. international capitalist interests. The very 19. A.G. Papandreou, “Multinational Corporations dynamic of the capitalist production process and ”, Social Praxis, Vol. 1, No. 2, 1973. makes this an impossibility. 11. The obvious comparison here is with the 20. W. Goldstein, “The Multinational Corporation”, reformism of the German SPD and K. Kautsky, Socialist Register, 1974, Merlin, p. 292. the initial proponent of a theory of peaceful 21. Wheelwright, op. cit. p. 37. McFarlane & Catley, ultra-imperialism. op. cit., p. 5.

12. This fact has also been widely used by “neo- 22. Goldstein, op. cit., p. 295. marxists” in attempts to refute Lenin, e.g. M. Kidron, “Imperialism: highest stage but one”, in 23. Picciotto and Radice, op. cit. p. 57. Murray, NLR, Capitalism and Theory, Pluto Press, 1974, No. 67, pp. 107-109. London (first appeared in 1962 in International ), pp. 132-3. On an empirical level 24. Ibid. p. 62. These authors do in fact give a more these arguments overlook the fact that Lenin accurate account of the function of the state referred to capitalist investments in other “regulation of the national market economy on advanced capitalist countries. More importantly behalf of the capital operating within it.” though, they are based on a lack of 25. Op. cit., pp. 74-76. understanding of Marx’s tendential law of falling rate of profit. 26. For the most comprehensive contemporary work on the marxist theory of the state see N. 13. M. Nicolaus, op. cit., p. 15. Poulantzas, Political Power and Social Classes, 14. This latter notion comes out, e.g. in R. Murray, NLB, and Sheed & Ward, 1973. “The internationalisation of capital and the 27. B. Warren, “How International is Capital?", Nation State”. NLR, No. 67, and Pici^otto and NLR, No. 68, 1971, pp. 85-86. Radice, Kapitalistate, No. 1, 1973, p. 57. 28. Writers such as Mandel have argued that the 15. E. Mandel, “Laws of Uneven Development,” internationalisation process could provoke NLR, No. 59, pp. 27-28. It should be pointed out some form of supranational state. Not only is that in his argument for a “United Europe" this mechanistic, but it falls into the ultra­ Mandel himself neglects inter-imperialist imperialist mistake of thinking that it is possible competition on a European level. Europe vs. to eliminate the contradictions from capitalism, America?, NLB, 1970, pp. 57-58. and ignores the fact of uneven development of social formations on which inter-imperialist 16. This is not to be understood in the terms put contradictions are based. forward by Barratt Brown, that “modern technology pushes firms beyond frontiers of 29. It has frequently been noted that, contrary to the nations" (p. 56, op. cit.). Technology is not the initial purpose of the EEC, it has been more determinant factor. Concentration and advantageous to US capital than European. See centralisation (and hence improvements in Mandel, Europe vs. America, p. 60; Turgendhat, technology) occur as a result of the imperatives The Multinationals, Penguin, 1973, pp. 106-107. of competition between capitals. 30. cf. Lenin's castigation of the "Leaders of 17. Sweezy and Magdoff go one step further when Socialism” (German SPD) for their adaption “to they refer to the “nation", “multinational the interests not only of ‘their national corporations and nations are fundamentally bourgeoisie', but of ‘their’ state .....” State and and irrevocably opposed to each other,”, in Selected Works, Vol. 2, Moscow, Monthly Review, Nov. 1969 In this article, the 1970, p. 287. “nation”, defined as a “collectivity with pretensions to sovereignty”, the “nation state”, 31. Marx & Engels, Introduction to German edition and the “national interest” are used of Communist Manifesto, 1872. MESW, op. cit., interchangeably. p. 31.