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From International Socialism (1st series), No. 104, January 1978, p. 31.
Transcribed by Christian Høgsbjerg, with thanks to Sally Kincaid.
Marked up by Einde O’Callaghan for ETOL.
Storm Over the Multinationals
by Raymond Vernon
Macmillan £10 Hardback
This book, produced with the aid of the multi-million dollar resources of the Graduate School of Business Administration at Harvard, is very disappointing, although about a topic that merits and only occasionally receives serious study.
Multinational companies operate in more than one country, and Vernon is quick to point out that this includes thousands of companies from just about every country in the world. The largest of them however are all based in the USA or Japan and it is these companies, along with the multinational banks, that have been responsible for the growth of productive capacity worldwide, and the major increases in world liquidity.
Responsible for the organisation of production in countries on a world-wide scale, moving vast sums of money around the world, their activities increasingly conflict with the old existing financial and legal structures of the nation state. Regrettably this book takes an utterly complacent view of the effect of multinational companies. One example will have to do because of space, but dealing with the effect multinational currency transactions can have on the exchange markets markets Vernon says,
‘But neither study finds that multinational enterprises systematically reduced their exposure in currencies that appeared weak.’
A recent article in Business Week (12 September 1977) pointed out that at times in 1976 as much as 2 billion dollars a day was being removed in cash from France by corporations. The article is wide ranging and deals with the many ways of quickly transferring funds out of France if the left coalition were to win the 1978 election. The opinions of several corporate treasurers are canvassed, and all assume that they have to reduce their company’s exposure to depreciation of the Franc. The article ends with the following,
‘US treasurers in France are loath to share their strategies with anyone, “This is a game where one guy’s gimmick gives him the advantage. If you talk about it you lose the advantage.”’
I think Business Week lives in the real world. The kindest thing I can say about Raymond Vernon is that he has been an academic for too long. Don’t buy his book.
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Last updated on 24 March 2015