INT 200: Global Capitalism and its Discontents

Multinational Corporations

Multinational Corporations

• Multinational corporations (MNC) – produce or deliver services in more than one country, usually with its

management in one country, its home country

• Transnational corporations (TNC) – does not identify itself with one national home

• MNCs and TNCs can have revenues larger than some countries’ GDP

Multinational Corporations• Corporation:

– legal entity that is created under the laws of a nation designed to establish the entity as a separate legal entity having its own privileges and liabilities distinct from those of its members

– ancient Rome and the Maurya empire in ancient India– joint-stock companies were capable of mobilizing

large quantities of resources and enduring over time – Dutch East India Company & Britain’s East India

Company – The USA and government charters– 7000 TNCs in 1970 to 78,000 in 2006– The "artificial person“ and a corporations right

to free speech

Multinational Corporations• Corporations, 1848-1914

– With the Industrial Revolution 10,000s of (Western) corporations began establishing operations in foreign countries

– Helped build the communications and transport links– Part of the New Imperialism

• Opium Wars, Banana Republics

• Interwar Years– Great Depression– Cartels

• an agreement between competing firms/countries to control prices

Multinational Corporations• After WWII

– Helped reconstruct the global economy– Concentration of business activity in certain regions– Global capitalism was restricted

• Soviet Union, Eastern Europe, China• Nationalization• Post-colonial countries:

– “In place of colonialism as the main instrument of imperialism we have today neo-colonialism. [...] The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world. The struggle against neo-colonialism is not aimed at excluding the capital of the developed world from operating in less developed countries. It is aimed at preventing the financial power of the developed countries being used in such a way as to impoverish the less developed.”

Multinational Corporations

• Contemporary– The largest 200 TNCs, including GM, Walmart, Exxon-Mobil,

Mitsubishi, and Siemens, make up over half of the worlds industrial output

– 70% of all world trade, almost all in the Global North

Multinational Corporations

• Washington Consensus => deregulated global labor market– Race to the Bottom– perceived unfairness in taxes, enclavist approaches, etc. have bread

significant resentment against capitalism in certain parts of the world

• International Power of the MNC– Tax competition, Market withdrawal, Lobbying, Patents