Business
How to handle Big Brother
Patrick Cosgrave
I have decided that I must be the most patient and tolerant reviewer of books now living. My decision is based on the fact that, after a good deal of thought, and a great amount of brooding, I have decided to take this trivial and silly little book* seriously. I recall that when I picked it up, while pottering about the Literary Editor's collection, I went to the Editor and said — in my naivety — that it must be an important work, since it was written by the deputy editor of the Times Business News, and was about an important subject — the growth of the international corporation, and the effect of that growth on the policies and independence of the nation states. But that is to use present hindsight to justify past foolishness: it does not explain why, after a relationship with the book the nature of which is sufficiently explained by my opening remarks, I continue to take the thing seriously. I will explain.
I will explain, first, why the subject is important. There is no doubt that, in the period since the last war, we have seen a large scale growth of companies — or corporations — with an international basis. This means, simply, companies which find it more advantageous to earn profits through overseas subsidiaries than through international trade. Thus, Company X— let us say one based in the United States — instead of pressurising the State Department to pressurise foreign governments to let American goods into their markets at competitive prices, builds a factory in a foreign country instead. Normally, it has gained tax exemptions because of the employment its factory creates. Normally, too, it finds that the subsidiaries become immensely profitable; so much so that their profit yield can exceed the yield of the parent organisation. All this is known.
It is known, too, that the international company brings in its train a peculiar international social structure, and a peculiar international morality, both, together, aptly dubbed by Mr Stephenson the "fly and drive" syndrome. The international social structure is created by the claim of the companies to a wisdom which transcends the interest for their peoples of the nation states themselves. Thus, Sir David Barran, chairman of Shell in the United Kingdom, once said, defending both the monstrosity that is the Shell building in London, and the size of his company, which challenged even governments, "Size can be properly used, and when so used it puts greater skills and greater capital equipment into the hands of each member of an organisation . ." By this he meant no more and no less than that the international company was wiser about human resources than any competitor, including governments. And the fly and drive set consists of those servants of international companies who spend more time travelling in the interests of the company than they do residing in their homes, to the benefit of their familes and society. That is the international community: something which demands more of those who serve it than they can or will give to their countries, families or wives. And if the last point seems too strong I refer you to the anecdote he heard which started Mr Stephenson on this book. It was reports from a Times man in Los Angeles to the effect "that the wives of some executives were refusing to conduct their private lives wholly or even primarily in conformity with the wishes of their husbands' corporate employers." That demand on the private lives of its workers is one of the marks of the international company, and, of the peculiar international morality which it purveys. By their economic power these companies influence governments; by their social power they dominate workers; by their overall power they threaten the democratic process itself, because they make demands and claims not susceptible to democratic judgement. They are, therefore, our enemies. All this Mr Stephenson demonstrates.
Why, if he does this well, do I describe his book as trivial and silly? I do so for three reasons — because of his fundamental and uncritical surrender to the economic ethos of the international company; because, when he challenges that ethos he offers an alternative equally horrible and even less efficient; and because of his almost total lack of awareness or understanding of the human — or genuinely moral — factor in our response to the threat of the international company. I propose to examine in some detail his inadequacies in some of these respects, and it is therefore convenient to deal with the last point in a brief compass: the wives mentioned above appear on page 1 of Mr Stephenson's book, and never thereafter. Their surrogates — those harmless rebels who revolt against international capitalism — are mentioned, only to be dismissed, on pp 61-2 when, it being demonstrated that they are a minority, Mr Stephenson sneers that "Politicians tend to pay more regard to majorities." Since he admits that the wives and the rebels alike are "all part of a rejection of the gods of materialism" (also a quote from p. 62, in case you thought that he had dealt with the subject elsewhere) it would have better behoved Mr Stephenson, the tone of whose book suggests a real, troubled, but confused, sympathy with ordinary humanity, to develop this aspect of things, rather than dwelling on his rather horrified fascination with the mystique and magnificence of the power of the international company itself. I must now show that Mr Stephenson is uncritically hypnotised by his subject. Throughout his book he writes the language of inevitability — the inevitability of the predominance of his subject. His starting point being the challenge offered by the corporation to the nation state he says (p. 2) "that our whole framework of thought and reaction is founded in the sixteenth century concept [actually seVenteenth century, but no matter] of the sovereign nation state." On p. 38 he says that the " straight choice for governments is either to merge their effective sovereignty or to lose the capacity [to support their best industries]." On p. 60 he says that "mergers will [my italics] take place on the terms that suit the international corporations." And, on p. 87, having criticised the idea of national opposition to his companies as muddled and illogical, he deprecates "Sentiments of economic nationalism" which "take slow account of changing economic reality." Reality, then, and Mr Stephenson, are on the side of the big guns of the companies.
What can we do, then, except be hypnotised in our turn by Mr Stephenson, or wring our hands? For a start we can point to the fact that none of the above inevitability quotations proceed from evidence adduced: all come from the author's fascination with size in business. Yet they reveal the inner, even hidden, predilections or prejudices which he brought to bear when he began his book. And, further, we can critically examine the two main presumptions which underpin Mr Stephenson's belief in the virtual certainty of the triumph of big business. The first is the belief that the mobility of big business (with all its beneficial effects on the domestic employment situation mentioned earlier) gives it a unique advantage in negotiations with national governments. True, the principal example Mr Stephenson advances is that of negotiations between the Grand Duchy of Luxembourg and Goodyear Tyres, but his point is clear nonetheless. He thinks that international companies, by threatening to move elsewhere, can endanger governments. The second presumption lies in Mr Stephenson's fascination with the internal organisational structure of big companies: he clearly thinks that these structures nowadays command the most effective possible loyalty of human beings. Since they do not we can forget about his second presumption.
As to his first, can companies so readily move around and maximise their interests? No, they cannot. General Motors — one of Mr Stephenson's favourites — cannot set up in Russia or China. There would be a very limited point to their switching investment from Europe to Uganda; or Britain to the South Sea Islands. In other words, there is a limit to mobility; and the companies can be restrained within even tighter limits than those suggested by the economic facts of life if national govern ments have the combined will to compel them to do so. And this really is a matter of political will. Mr Stephenson records the case of the Argentine, the government of which offered exceptionally attractive inducements to General Motors to stay in the country when the company had decided to withdraw, because they were determined to have an automobile industry. If they had chosen to do without one, they could have done without General Motors.
The real question is, what kind of equivalence of action between governments can restrain the growth in power of the giants? Is it to be alliance or merger? Mr Stephenson believes that no form of alliance between sovereign states can do the trick: we must have supranational government. This is the point at which his argument is most trivial and most dangerous. We must look carefully at the likely consequences of that easy, and oft-made, assertion that bigger government is the answer to bigger business, on the grounds that something called "political control" is a panacea for the ills created by economic monopoly. There is no evidence that that is the case: indeed, such evidence as there is suggests the reverse. In Brussels, which is the headquarters of the nearest approach we have to an organisation aimed at the supranational control of a number of civilised and sophisticated states, there has been a burgeoning and increasingly powerful bureaucracy, of a type very similar to that created and employed by the giant corporations, rather than any effective increase in political or democratic control, since the EEC was founded. There, too, is a school, which is a veritable paradigm of all the things which the big non-national conglomerates do to people. It is a school for the children of the international civil servants at Brussels, and it tries to educate those children in a faceless, rootless, invented Europeanistic culture. Of course it does not work in human terms, any more than the wife-dominating morality of the international corporation works in human terms; and I hear that the children at the Brussels school have demonstrated gratifying good sense by splitting up into competitive little national groups.
In effect, then, and without understanding that he has done so, Mr Stephenson has offered us a choice between two horrors. He has done so without more than casual reference to the structure — that of the nation state — which is under attack. But to appreciate what is involved in this dread problem we must understand what the nation state has represented and does represent. It is no more and no less than the institutional sum of our past and our identity. I say " institutional " to distinguish it from religious faiths and cultural traditions, but we must also accept that the structure of the nation state has preserved many religions and many cultures from assault and destruction from outside. Of course the nation state is not perfect. There were in the past, and are in the present, many flaws which an effectively Utopian design could remove. But in an age when it is customary to neglect the claims of patriotism, and to sneer (as does Mr Stephenson when he writes about General de Gaulle) at the pretensions and ambitions of national governments, it is worth remembering that every secular thing of value we are aware of — democracy, freedom of the press and of the individual, and freedom of religion — all exist only within, and are protected only by, the Western nation states that we know, and by other countries only to the degree that they imitate the West. There is no comparable or imaginable structure of power and government which can preserve the things we value, the things that define our identities. So, when Mr Stephenson dismisses the nation state, and supports the conglomerate he prefers as against the one which he dislikes—in spite of its hypnotic effect on him — we should be aware of what he is dismissing.
The sole value of his book is in reminding us of the basic facts about the growth of international corporations and the social and moral structures which they create; and there are many earlier text books which do that for us. What is much more worthy of explanation is the reason why nation states have been so singularly gutless in their resistance to the corporations. Mr Stephenson believes that there is simply nothing they can do. He gives as one of his examples the cancellation of TSR2 because "the British government decided that the project was beyond its justifiable resources." Now, this is a singularly superficial adumbration of a complex political event. TSR2 would have cost under £200 million; Concorde will cost something over £1,000 million, of which Britain's share will be half. So, though Mr Stephenson praises Concorde in principle as an example of international co-operation, he ignores the fact that Britain's expenditure alone would build not only TSR2 r7 but TSR3 as well: of course the resources were there. They were not used because of the hostility to national defence of the Labour Party. The whole sorry business had nothing whatever to do with nation states being unable to go it alone in the age of the international corporation. What they require to control the corporations, and to develop themselves as their people wish, is will, intelligence and determination. They require an awareness of the national interest, such as Labour did not possess in the matter of TSR2, and a determination that, when they make alliances with international corporations, they do so in their own interests and on their own terms. In this last matter governments of both parties have been singularly lacking: in the oil fields now being opened up in Britain by international companies, and particularly by American companies, there is almost no protection for independent British interests — not in terms of investment, environment or employment. Now, the international companies are not drilling our oil because we are allowing them to exploit us: they are doing so because the oil is there. And in practically every underdeveloped country which is now producing oil there are powerful, and increasingly stringent, controls on the oil companies in the national interest: and the giants do not go away; they take their punishment and smile as best they can. If Nigeria and Libya can do it, why not Britain and France? There is, in short, nothing to fear about the big companies except the danger that, recognising them to be nasty and pernicious, we nonetheless are too nerveless to bring them to heel.
There is little that needs to be done that cannot be done, given the will. But will must also be served by skill. Since Mr Heath took office there have been some encouraging developments in providing the central government machinery with some system of scrutiny, more efficient than we have had hitherto, of the activity of business in its relations with government. Not everycrne is happy with Lord Rothschild's report on research and development, but it indicated determination to replace the old system of handouts with something rather more critical, in the public interest. Similarly, Derek Rayner's Defence Procurement Executive has a good chance of bringing some kind of rationality into future expenditure on defence production, though it is hardly heartening to hear that Mr Rayner is leaving Whitehall, and is to be replaced by a civil servant of the old school. The two great future tasks awaiting more highly developed versions of such bodies as the Think Tank and the DPE are: firstly, to develop a system of criticism and projection which can reduce the level of expenditure on new projects in advanced technology which must be undertaken before a government can decide whether a plan is viable or not — at present about a quarter of total development cost must be provided before any certain commitment to success can be made — and, secondly, to devise a method of advising government on choosing which, among even viable plans, to support, in the light of its general ambitions for the nation. It has often been said that we have in this country the most original and striking capacity to produce technological and scientific innovation; but too frequently seemed uninterested in bringing projects to fruition: thus Barnes Wallis's swing-wing aircraft design was given away to the Americans. It is a fair point: though, as Mr Stephenson points out, technological creativity is no guarantee of commercial success. Certainly, our general idea, that no pressure which has a vulgar or commercial character can ever be nut on creative science, must be discouraged, and some relationship has to be established between what the country needs and what the scientists and technologists can do. However, important though all this is, it is technical: all the desirable technical things can happen only if they are supported by a sense of national purpose. When we — or the Prime Minister — speak nowadays about "one nation" we tend to the concept of unity enshrined in Disraeli's phrase in a context of fairness and social justice. But it also means unity in the sense of effort: effort, struggle and energy to make the national interest prevail over its enemies.
Previous page
