The threat to the nation
All British governments like to try to conceal information from the electorate: the present government is simply more barefaced and ruthless in the matter than most. It is also fortunate in that a frequently lazy press frequently ignores the substance and body of, let us say, a !heavyweight research report, and simply accepts as the arithmetical truth about its conclusions what ministers, press departments, and Whitehall hacks want the electorate to believe. This happens so often, and on so many subjects, of varying Importance, that one can only suppose the sense of the media to be permanently dulled, simply by the repetition of half-truths. When, however, a series of half-truths and untruths are told about a report on a subject so vital to the nation's future as the growth and development of the multi-national company — a subject, moreover, which has given rise to so much controversy in Ltile past — we feel that the government must have something to "td.e; and we feel obliged largely to abandon the judging and Philosophical tone of a leading article in order to find space to present irrefutable evidence about the manipulation of a vital and scholarly report on a subject of paramount importance by a number of scholars commissioned by government.
The old Board of Trade asked Professor M. D. Steuer and a number of Colleagues to investigate the activity of multi-national cornpanies in Britain. Their report — entitled 'The impact of foreign direct investment on the United Kingdom '(HMSO E2.10) — has just appeared. The Department of Trade and Industry the successor ministry — chose to announce publication of, and evaluate, the report 'through the medium of a speech by Mr Christopher Chataway in West Scotland on August 14. This, inter Oa, is what Mr Chataway had to say: This is an important and thorough piece of work and will, I believe, set at rest many of the anxieties there have been in certain quarters about foreign investment. Professor Steuer broadly concluded first that direct inward investment represents a real increase in capital per head of the United Kingdom and hence an increase in real incomes; second there appear to be beneficial effects on the balance of payments; third a question of " foreign acquisition of Important technology " is shown to be largely emotive; fourth, generally speaking experience in in gustrial relations shows foreign investment to lead to greater flexiility and productivity — and the pattern of labour relations is not markedly different from domestic firms; and finally, of course, there are favourable regional effects.
Thus, Mr Chataway, who observed that "British Governments e strongly encouraged overseas investment in this country," 1:vas able to announce with a sense of distinct righteousness, This is a policy which we intend vigorously to continue."
Generally speaking — to employ Mr Chataway's own anodyne phrase — the minister's account is a fair representation of chapters tvvo, three, four and six of a ten chapter report. True, on the 9uestion of technology Mr Chataway omitted the fairly important Steuer conclusion (p. 170, 8.24 ii) that the power of an inter!lational corporation in relation to a host state is vastly increased 1,9 the extent of the technological dependence of a subsidiary nrrn in the host state on its parent — this dependence being charaCteristic of the multi-national activity. But, still, there is apParently no more than the normal ministerial fudge about his buoyant 'account of how Professor Steuer agrees with the Government.
Could it, however, be the same report which says of the multinational company in relation to the host state that . . , but for the moment suffice to say that by reducing effective options open to a host government, technological dependence does lead to a reduction in national sovereignty (the report's italics).
Or The sovereignty of the host government is called into question in so far as it is unable to alter the behaviour of the subsidiary or to the
extent that it incurs excess costs in so doing . Since the I[nternational] C[orporation], in general, operates in a shadowy region between national legal jurisdictions where the lines of legal responsibility and obligation are not always clear, informal pressures and inducements otten play a very significant role and, as a consequence, the basic loyalties of the IC become a key issue.
Or The host government may then be involved in significant persuasion costs or even in extreme cases find itself faced with a situation where its sovereignty is completely ineffective.
Or The resources available to giant international companies in calculating and single-mindedly pursuing their relative advantages, in a world populated by nation states each running different tax rates, are immense.
Or
The important observation in the present context is that a national government, like the UK, can become a double loser in the national sovereignty stakes; inward investment imposes its characteristic pattern of costs but in addition "necessitates "the creation of "domestically " based competitors which can only prosper across the national boundary; thus once again reducing national sovereignty.
Or In all the above respects the bargaining power of the IC is increasing. In the UK economy, for instance, the ICs are growing in size, their centrality is also increasing especially in regard to technology, the proportion of the economy in foreign hands is growing and finally we are observing the emergence of the genuine IC with a global orientation. The persuasion costs accruing to governments are likely to increase in the future with a corresponding reduction in national sovereignty. In certain cases the costs may become so high as to effectively preclude certain national objectives. (The report's italics).
Or (bearing in mind the self-satisfied way in which Mr Chataway said that Of course it is right to subject great international companies . . . to close scrutiny," "But the fact remains that UK disclosure requirements are already more stringent than those, for example, in the rest of the community "): The major conclusion which emerges is that existing institutional arrangements in the United Kingdom are not adequate for properly monitoring the activities of foreign owned firms. It would be wise to concentrate on this rather than emphasising government to government co-operation Mr Chataway told his audience that "We are already discussing this question at international level . . . with a view to getting a greater measure of uniformity , which would be difficult to achieve, and itself involve a loss of sovereignty.
The melancholy evidence could best be multiplied simply by reprinting the entire 217 large pages of the report. It seems, indeed, that there is no other way in which the meticulous and scholarly effort of Professor Steuer and his colleagues (the full range and subtlety of wHich it is not possible to present here) can be given fair coverage. For the BBC simply ran — and then only in its early morning news bulletins — a summary of Mr Chataway's speech, purporting to be a summary of the report. The Times did likewise on the first page of its Business News section, and, though this was followed by a long article four pages later by Mr Peter Jay, that article purported to present as the conclusion of the report a passing remark saying that "it is hard to avoid the feeling that some of [our italics] the objections to the growing success of the multinational firm is a dog in the manger attitude." The Guardian was fairer — even if it used the headline Overseas investors do assist Britain's balance of payments "— but the report of the report was again buried among the business pages. If this is the spirit in which the tribunes of the free press and our liberty present the results of an important investigation, and the studied misrepresentation of it by a government minister, then the prospects for our future are poor indeed.
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