Is Bigness Bad?

Multinational companies have probably created more international mystery and controversy than any institution except the CIA. Many people feel that the transnational companies, as a new, major and poorly understood force in world business, must somehow be responsible for the prevalence of such economic ills as high prices, unemployment and balance of payments hemorrhages. Such suspicions are being fanned by a new book, Global Reach (Simon & Schuster; $11.95) by Political Scientist Richard J. Barnet and Economist Ronald E. Mueller, that is kicking up a considerable controversy of its own.

The book has been praised by Psychoanalyst Erich Fromm, Economist John Kenneth Galbraith, Sociologist (and Socialist) Michael Harrington and other academicians. It has been vigorously denounced by multinational executives, including PepsiCo Chairman Donald Kendall, who says that the book displays an anti-growth bias that "sounds like a great leap backward to the Dark Ages." Both sides have ammunition: Global Reach is an odd blend of reasoned argument and far-out fantasy.

Barnet and Mueller begin soundly enough by identifying the main problem created by multinationals as one of policy lag. While nations plan on a coun-try-by-country basis, international firms view the world as a single unit and plan accordingly. Thus, Barnet and Muller contend, "the structural transformation of the world economy through the globalization of Big Business is undermining the power of the nation-state to maintain economic and political stability within its territory."

Through various accounting means, the authors contend, companies slide huge amounts of capital across national boundaries to escape high tax rates and pile up profits. By shifting production from one market to another, global firms leave unemployed workers behind. Powerful producers like auto, appliance and computer manufacturers have banded together in restrictive combinations to protect their revenues, the authors claim, and deprive consumers of a truly competitive market system.

These accusations are at least plausible--though the supporting evidence presented by the authors often is doctrinaire and unconvincing. They could serve as the starting point for a fruitful debate on the proper role of multinationals. In rebuttal, multinationals could argue that they probably have increased world employment by spurring production. They also could maintain that they have spread the benefits of modern technology and management skills, and increased international understanding by shifting employees from one country to another.

Unfortunately, instead of addressing such points, the authors depart on flights of exaggeration that turn Global Reach into an overreach. Breathlessly capitalizing nouns, they assert that multinationals are run by World Managers who aim to create a Global Shopping Center or One Great Market. That Global

Shopping Center, the authors assert, is the beginning of a new world hegemony of the World Managers, a monolithic group totally agreed on how to conduct the planet's affairs. "What World Managers want from the American State," the authors say, "is a low military profile and a much more aggressive foreign economic policy." And "some corporate executives talk of building a 'belt of capitalism,' which will tie the U.S.S.R. and China into an integrated global system."

Some readers might wish that such a belt could be created--but in fact multinationals are not all that powerful. Far from being monolithic, for example, they compete vigorously, not only against smaller national firms but against one another. Barnet and Mueller further charge that the multinationals have destroyed traditional values in the underdeveloped world, disrupted the sense of community and lured away scarce capital and scientific talent, a contention that leaves unexplained why many poor countries compete for multinational investment. In the U.S., the authors say, the multinationals have created unemployment, cheated on taxes and corrupted the Government enough to cause "the Latin Americanization of the United States"--a description that might surprise both Yankees and Latins. By making such generalizations, the authors turn what should have been an evenhanded investigation into a biased indictment.

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