NEW ANGELS OR OLD RASCALS?

WHAT ARE TRANSNATIONAL CORPORATIONS?

Paulos Mar Gregorios

As a Philosopher, I am persuaded that the more significant aspects of reality are corporate and not atomistic; social, not individual. From that perspective, I should be glad at the emergence of a new kind of corporate reality -- the Trans-National Corporation or TNC for short.

We insist on calling them TNCís rather than MNCís, for it is not their multi national character that brothers us. In fact I am personally convinced that national sovereignty is an obsolete concept, and we are aheady in a multi - national world. For example, one of the major areas of development in which I am interested is multinational cooperation among the so called developing countries and the socialist countries. I am for multi national cooperation for an equitable development of all cooperating societies. The multinational character of an economic enterprise does not make it ipso facto evil. What is evil is that these TNCís are trans-National; i.e. they escape the authority of any nation. So we stick to the term TNCís rather than use the term MNCís.

Let us first get some facts about Corporations as such before we get to the TNCís. These animals, functioning within the world market economy system, are already grown to some frightful proportions. Fortune magazine publishes every year a list of the 500 largest companies outside the U. S. with an indication of their sales, their assets, their net income, etc. You know that the largest of these animals outside the U.S.A. in both 75 and 76 was Royal Dutch/ Shell group. Total sales was $ 36,087 million, and profit after taxes and so on was $ 2,347 million. Employees-- 153,000. Now, that is a TNC, and the figure given are only for their operations in Netherlands and Britain. The next largest non-American TNC is Unilever, which also operates out of Britain-Netherlands. They employ twice as many people (317,000) as Shell, but their total sales was less than half as large ($ 15,762 million) and their profit after taxes only 518 million. Poor Unilever! Philips of course did worse than Unilever. Employed almost 400,000 people, sales only 11,521 million, profit only 213 million.

If you take only profit, National Iranian Oil Company did best. Employing only 57,331 people, and having a sale of only 19,103 million, they made a profit of 17,175 million. (Which is actually 87% of turnover, and about 2 1/2 times as much as the total assets of the company). But that is a special case. Petrol business is like that. Even British Petroleum, which had almost the same mount of turnover ($19,103 million) as Iran Oil, made a profit of $325 million after taxes, but then they had to buy most of the petrol they sold. What about German and Japanese? Well actually Germanyís Hoechst (chemicals and medicines) comes only 9th in rank in the list.†Number 12, 13, 14, 16 & 17 are all German.

Rank
Company

Sales
(Millions $)
Profit
(Million $)
Employees
12
Daimler-Benz 8938
164
160,863
13
Volkswagen 8513
399
183,238
14
Bayer (drugs) 8297
181
171,200
16
Siemens (Electric) 8060
222
304,000
17
Thyssen (Machinery 7947
105
139,440

The largest Japanese giant, Nippon Steel Co., is 15th in the list in 1976 (she was 7th in 1975). She made a sales of $8089 million, but her profit was only $38 million. The next Japanese giant, Totota Motor company, had a sales of $7696 million. Her profit last year was $345 million.


What about Indian giants? The largest is Indian Oil Co., and she comes 103rd in the list (she was 115 in 1975). Total sales $2145 million; profit $29 million. The next Indian Company is also a State undertaking-- the Steel Authority of India. Sales $1015 million, profit $34 million. People employed 204,532. But she is 229th in the list (in 1975 she was 181st). The third Indian Company in the list of 500 is Bharath Heavy Electricals -- Sales about $425 million, profit $26 million, employees 52,000, and her rank is 474 among the 500. †
No Birla, no Tata, or Dalmia in this list because the 500th largest company had a sales of $395 million, and our companies are organized in smaller units than that.

Of the 500 companies, Britain has 87, Canada has 39, France has 46, Germany has 67, Japan has 117 and India has 3. A little country like Holland has a dozen; Sweden has 25; little Switzerland has 14; even Spain has 12; and Italy has 14. All of African has one, namely Zambia Uning Co., which is 141 in rank. If you exclude Japan, East Asia has seven companies -- three in India, three in South Korea, and one in Taiwan. West Asia has four -- two in Turkey, one in Iran and one in Israel. Most of these Asian companies are oil companies.

It is good to know where we stand. What about banks? If we take the 50 largest banks outside U.S.A., the first is Deutsche Bank (Germany) with assets of $44,593 million, the second is Dai-Iohi-Kangyo Bank in Japan with $43,012 million, the third is Banque Nationale de Paris (France) with $41,424 million. The largest Swiss Bank, the Swiss Bank Corporation, comes only 29th in rank; the next Swiss Bank is 30th. They have assets of $21,556 million and $21,513 million respectively. The 50 Banks are distributed as follows:

††††††††††

Country
Banks
Japan
16
Germany 09
France 05
Britain 04
Canada 05
Switzerland 03
Netherland 03
Italy 03
Balgium 01
Brazil 01
Total 50

The total assets of these 50 banks is U. S. dollars 1,287,592 million. You know now who runs the world.

I have not mentioned the U.S.A. so far, and I come to that now. If you take the 50 largest companies in the world, and rank them in terms of sales, the first ten are the following:

Rank Company Country Sales (1976)
in $ Million
Profit
in $ Million
1
Exxon
USA
48,630
2641
2
General Motors
USA
47,181
2902
3
Royal Dutch/Shell
London/Holland
36,087
2347
4
Ford Motors
USA
28,839
983
5
Texaco
USA
26,451
869
6
Mobil Oil
USA
26,062
942
7
National Iranian Oil
Iran
19,671
17,175
8
Standard Oil of California
USA
19,343
880
9
British Petroleum
Britain
19,103
324
10
Gulf Oil
USA
16,451
816

Seven out of these 10 are American. The non-American giants cannot compete with the American giants.

The fifty largest companies of the world together made a profit of $46,085 million in 1976. The total income of 620 million Indians was about the same as this, perhaps a little more.

Of the 50 largest companies, not one is in India. The only Asian companies are the five from Japan and the one National Oil Company of Iran. There are two Latin American companies-- both oil, one in Venezuela and one in Brazil. No African company. U.S.A. has 22, W. Germany has 7, France has 5, Britain and Holland together have 6, Italy and Switzerland one each.

Why talk about Trans-National Corporations at all? The giants are clearly in U.S.A., W. Germany, Japan, France, Britain, Netherlands, Canada and Italy. They control the World Economy and the World Capitalist-Imperialist system.

The TNCís are only one aspect of this world domination and should never be detached from the picture of world imperialism and capitalism led by the above nations of North America, Western Europe and Japan.

Now I shall give below a list of TNCís with direct holdings or subsidiaries in India.

†††††††††


Company
Country
Goods
1
Metall Gesellschaft AG
W. Germany
Metal Works
2 Friedrich Krupp GmbH† W. Germany† Metal works
3 Union Carbide Corp: U.S.A. Chemicals
4 Firestone Tire and Rubber Co., U.S.A. Rubber goods
5. Dunlop Holding Ltd.† U.K. Rubber goods
6. British Steel Corp:† U.K. Iron and Steel
7. Sandvik AB† Sweden Nails, Screws
8. Akzo NV† Holland Silk and Chemicals
9. Unilever Ltd., U.K./Holland† Food, Soaps, Cleaning Materials.
10. Asea Allmanna S.E.A.† Sweden Electricity distribution &

Transport Equipment

11. Bayer AG† W. Germany Chemicals and

Pharmaceuticals

12. Robert Bosch GmBH† W. Germany† Electrical goods,

appliances

13. Heochst AG† W. Germany† Chemicals, fertilizers
14. Banque Nationals de Paris† France† Money
15. CIBA Geigy AG† Switzerland Chemicals and

Pharmaceuticals

16. Sandoz AG† Switzerland Chemicals and

Pharmaceuticals

17. British Leyland Motor Corp:† U.K. Buses & Trucks
18. American Morots Corp:† U.S.A. Buses & Trucks
19. Turner and Newall Ltd., U.K. Plastic Materials
20. Tata and Lyle Ltd.,† U.K. Sugar
21. The Plessey Co., Ltd.† U.K. Food Preparations,

Telecommunication

Equipment

22. Lucas Industries Ltd., U.K. Electricity distribution

Equipment

23. International Computers Ltd.† U.K. Computer Equipments
24. Imperial Chemical Industries Ltd., U.K. Chemicals, Fertilizers
25. Beecham Group Ltd.,† U.K.† Pharmaceuticals
26. Brook Bond Liebig Ltd., U.K.† Food & Tobacco
27. E.M.I. Ltd.,† U.K.† Electricity distribution

Equipment

28. Fisons Ltd., U.K.† Chemicals, fertilizers

Pharmaceuticals

29. General Electric Co. Ltd.,† U.K. Electricity distribution

Equipment

30. Telefonaktieboleget LM Ericsson† Sweden Telecommunications

Apparatus

31. AG Brown Boveri et Cie† Switzerland Electric Equipment.
32. Nestle Alimentana AG† Switzerland Electric Equipment
33. Albright and Wilson Ltd., U.K. Chemicals and fertilizers
34. CPC International Inc.† U.S.A. Information not available
35. American Telephone and

Telegraph Co. (Bell System)†

U.S.A.† Information not available
36. International business Machine Corp:† U.S.A.† Information not available
37. Tootal Ltd.,† U.K. Textiles
38. The De La Rue Ltd.,† U.K. Plastics
39. Coats Patons Ltd.,† U.K. Textile Yarn
40. Burmac Oil Co. Ltd.,† U.K.† Petroleum Products

(Nationalised)

41.† British Petroleum Co. Ltd.,† U.K. Petroleum Products

(Nationalised)

42. British American Tobacco U.K. Tobacco and Perfumes
43. Vickers Ltd.,† U.K.† I.N.A.
44. Tube Investments Ltd.† U.K I.N.A.
45. Shell Transport & Trading Co. U.K. Petroleum Products

(Nationalised)

46. Metal Box Ltd U.K.† I.N.A.
47. Cie Francaise des Petroles.† France Petroleum Products

Chemicals

48.† Phelps Dodge Corp.† U.S.A. Copper and Aluminum
49. The Goodyear Tire and Rubber Co.† U.S.A.† Chemicals & rubber

Manufacturers

50. Svenska Tandsticks AB† Sweden Paper Board
51. Svenska Kullager Fabriken† Sweden† Hand and Machine tools
52. Svenska Flakt Fabriken† Sweden† Jute?
53. Facit AB Sweden† Office Machine
54. Atlas Copco AB Sweden I.N.A.
55. Guest, Keen and Nattle folds Ltd.† U.K.† I.N.A.
56. Standard Oil Co. (Indiana)† U.S.A. Gas
57. Sperry Rand Corp.† U.S.A. I.N.A.
58. Philip Morris Inc.† U.S.A.† Tobacco
59. Mobil Oil Corp.† U.S.A.† Petroleum, gas coal
60. Borg-Warner Corp.† U.S.A.† Chemicals
61. Caterpillar Tracter Co.† U.S.A.† Tractors & Agri

equipment

62. Gulf Oil Corporation† U.S.A. Petro Products
63. Ingersoll-Rand Co.† U.S.A.† Machinery
64. International Harvester Company† U.S.A. Agromachinery
65. Johns-Manville Corp.† U.S.A.† I.N.A.
66. International Nickels Co. of Canada Ltd.,† Canada, Tubes, Pipes
67. Massey-Ferguson Ltd., Canada† Agromachinery

There must be many more companies operating in India through various other devices, and many others operating through subsidiaries. These were the companies that I was able to track down from available evidence. Do we not have a right to demand from the Government of India that the facts be public about:

a) What companies operate now in India?

b) How much capital have they brought in?

c) How much profits have they taken out?

d) When would they leave India?

e) What policies are in force now about admitting them to continue to operate in this country?

f) What is their record in terms of efficiency of operation, effectiveness in transfer of technology, their labour relations, their efforts in corrupting Government officials, their role in elections etc?

Such a study should be undertaken also by institutions like the Indian Institute for Development Studies.

We now take up the arguments pro and contra TNCís.

1) Means of Efficient Production. Their proponents argue that TNCís are the most efficient means of large-scale development efforts. Since they have technical and managerial experience of a high order acquired through massive operations elsewhere, they can produce goods more efficiently and at an accelerated pace. This argument really breaks down when we make a study of the efficiency and cost-benefit factors. It has been found in other places that the work done by TNCís could have been done by a local company or group of companies much more efficiently and at a lower cost.

2) Transfer of Technology. The second argument is that they are the most effective instruments for the transfer of technology from the developed to the developing countries. This argument too breaks down on examination. Usually we pay for the technology that the TNCís bring. We do not get it free. We could just as well as have bought that technology without using TNCís. Besides, when TNCís operate, they jealously guard the key technology, without communicating it to local elements. The key technicians are also foreigners. Only that way can they assure their continuing operation in the country. Clearly there are other and more efficient means of transferring technology.

3) The Creation of New Employment. The third argument for TNCís is that since developing countries have an acute problem of unemployment aggravated by the fact of capital shortage, these TNCís bring Capital from outside and generate new employment. This argument is only partly valid. In many countries there are serious complaints about their employment practices. In the first place most TNCís use the capital-intensive form of technology. If the production were completely under local control, we could have used a more labour-intensive technology and provided more jobs than what the TNCís are doing. TNCís actually put a lot of small companies out of existence, and thereby create new unemployment.

4) Their Contribution to Research and Culture. The TNCís claim that they make very generous grants for research and cultural activities in the lands of their operation. This argument is certainly not valid. No TNC brings money from outside to make contributions to culture and research. It is usually a small portion of their local profits that they devote to research and cultural programmes. This money is produced by the labour of the local people and not contributed by the TNCís. Besides, the kind of research that they do is not always the most needed by the people; often it is the sort of research that will bring more profits to the TNCís.

5. Pace makers for the Future: One of the more interesting arguments in favour of TNCís is that they are the signs of the future. Glossy Propaganda magazine like SPAN argue that since tomorrowís world has to be international, rather than national, these TNCís show the way towards the future, and should be seen as full of promise for the future. The fact of the matter, however, is that the private enterprise TNCís belong to the last stage of imperialistic capitalism, the last attempt to establish a complete network for maintaining the economicand technological hegemony of the Metropolitan countries in the market economy world. They are attempts on the part of the neo-colonialist world market economy to bypass the authority of the ex-colonial governments and to have an instrument which can neutralize from within the growingly strident political and economic power of the poor countries.

The arguments against the TNCís are manifold.

a) Their basic orientation is towards quick profits for the company and not towards safe-guarding and promoting the interests of the people of the land in which they serve. Such an orientation on the part of an economically powerful group becomes a serious handicap in the developmental efforts of the poorer nations.

b) Arising from that fact, the TNCís often specialize in quick profit areas like beverages (Coca-Cola) luxury consumption items (packaged food, toilet articles, Television, Telephone, Refrigerators), high profit foreign label mass market items (pharmaceuticals) rather than on basic commodities related to food, clothing, housing and transportation.

c) By entering an area where the small entrepreneur is making a living and employing a few people, the TNCís push out the small local businessman and his employees. This dampens the spirit of enterprises. Thus even small capitalists are often opposed to TNCís. Only the big ones benefit from them by collaboration.

d) They can control the pricing of certain commodities (like pharmaceuticals) by common agreement among the few TNCís or other corporations who remain after the small ones have been pushed out. They thus become a major exploitative force. It Britain recently, Swiss pharmaceutical companies have been fined millions of pounds for over-charging for the medicines sold by them.

e) The biggest problem is that they have ways of evading control by local governments. They can do all kinds of foreign exchange deals because they have branches in several countries. Governments may not be able to control how much foreign money comes or goes.

f) They have a very bad record of bribing and corrupting local politicians and government officials. We know about the Boeing scandals the Douglas Aircraft scandals and so on. The TNCís are a major element in promoting bribery and corruption in the poor as well as the rich countries.

g) They can enter into local politics, and finance politicians and elections through their local companies. It would be interesting for someone to make a study of what role some of these companies played in the last Indian elections, and to what extent they were used by foreign elements to influence the outcome of the elections.

h) In some cases they can use other techniques as well as their tremendous economic power and international contacts to bolster up tottering reactionary regimes which will ensure the security of TNC operations and of the World Market Economy system in general. They can undermine a government as happened in Chile.

i) The worse kind of TNCís are the information media corporations like Reuters, UPI, etc. By controlling information they exercise enormous influence in forming the minds of the people in developing countries in the direction that serves the vested interest of the industrially developed countries and the propertied classes of the developing countries who are allied with the world market economy system.

j) They spread an unhealthy, consumerist, bourgeois culture, based on greed and sensuality, quick gratification of the beset desires, heavy consumption of tobacco and alcohol, and loose sexual morality. The TNCís play a major role in ďAmericanizingĒ or ďWesternizingĒ an ancient culture. The advertisement techniques, movies, novels, television programmes etc. of a decadent bourgeois culture provide the coveted values of TNC culture and work like a cancer destroying the cultural creativity and life of the developing countries.

That I think, does not detract from the fact that some TNCís have done some good work in promoting industrial development despite their basic profit orientation.

A distinction has to be made between TNC operations of Private Enterprises and similar activities of Transnational State Corporations created by Socialist countries which operate on socialist principles. Similarly, distinctions have to be made between Private Enterprise TNC operations in socialist countries where the State control is extremely effective and watchful and in poor countries where such control can be easily by-passed or bought off.

A sober evaluation of the role of TNCís in todays world need leave no doubt about the answer to the question: Are TNCís new angels bringing a new world order of international and national justice, or merely old rascals of the market economy, imperialist-neo-colonialist system in a new grab and endowed with more dastardly power?