"Multinationals On Trial"
Petras is Binghamton University, New York Professor Emeritus of Sociology
whose credentials and achievements are long and impressive. He's a noted
academic figure on the left and a well-respected Latin American expert.
He's also a prolific author of hundreds of articles and 64 books including
his latest one titled "Multinationals on Trial: Foreign Investment
Matters," co-authored with Henry Veltmeyer, and subject of this
has collaborated with Petras before on previous books. They include
"Globalization Unmasked," "Social Movements and State
Power," "A System in Crisis" and others. He's Professor
of Sociology and International Development Studies at Saint Mary's University,
Canada and Universidad Autonoma de Zacatecas, Mexico. He's also Editor-in-Chief
of the Canadian Journal of International Development Studies and, like
Petras, is a prolific author of many books and articles focused mainly
on Latin American issues, globalized trade, alternative models and approaches
and progressive social movements.
on Trial" deals with a core issue of our time - the economic power
of giant corporations, their dominant role as agents and partners of
imperialism, and the way they plunder developing nations. The book is
a powerful indictment of unfettered "free market" capitalism
and how foreign direct investment (FDI) is its main exploitive tool.
Below is a detailed review of its compelling contents.
state upfront how controversial corporate giants are, especially with
regard to their "type of capital," how they use it operationally,
and "the conditions associated with it." Specifically, the
book deals with foreign direct investment (FDI) and debunks the following
commonly held notions:
-- that it's
"indispensable" to accessing essential financial resources;
-- that it
brings with it "collateral benefits" like "technology
transfers" and job creation; and
-- that overall
it's a "catalyst of development" and thus an "indispensable"
vehicle of growth and way for developing nations to integrate into the
"new world economic order."
aiding these nations, the authors call FDI "a mechanism for empire-centred
capital accumulation, a powerful lever for political control and for
reordering the world economy." They offer an alternative approach
in the final chapter, free from FDI imperial bondage.
- Empire and Imperialism
empires go back centuries before the better known ones in ancient Rome,
Persia and the one Alexander the Great built, but the authors deal only
with the modern post-WW II era dominated by the US. Imperial Britain
was shattered, colonialism was unraveling, Soviet Russia was devastated,
and America stood alone as the world's preeminent economic, political
and military superpower with every intention to keep it that way.
It did so
going back to when US delegates dominated the Bretton Woods, NH UN Monetary
and Financial Conference to establish a postwar international monetary
system of convertible currencies, fixed exchange rates, free trade,
the US dollar as the world's reserve currency linked to gold, and those
of other nations fixed to the dollar. In addition, an institutional
framework was designed to establish a market-based capital accumulation
process that would ensure (post-war) that newly liberated colonial nations
would pursue capitalist economic development beneficial to the victorious
imperial powers that would soon include the Axis ones as well.
the "US foreign policy establishment" began an unending debate
on how America could stay preeminent and solidify its dominance. It
began with NATO, OECD and other formal alliances with our western European
partners that were "built on the foundation of the transnational
corporation (as the) economic 'shock-troops' of the system." Tactics
varied along the way, but the goals remained unchanged - "to enhance
US hegemony and its domination of the new world order." This requires
having supportive allies and the US public willing to go along with
overseas adventurism like the Bush administration's foreign wars that
became overreach and "a major impediment to empire building."
state that wherever imperial power is projected in any form it generates
diverse resistance in "every 'popular' sector of 'civil society.'
" They also stress that its "omnipresence" can be a weakness,
not a strength, and may lead to its impotence. This is the condition
of America today under the Bush administration. Its plan for imperial
dominance is in tatters, or as the authors put it, "wishful thinking
or imperial hubris." It failed in the Middle East, Central Asia,
Venezuela and may be unraveling in Pakistan under Musharraf's dictatorship.
The country is a rogue nuclear state in unresolved turmoil that has
a lot to do with deep social unrest and a very unpopular US alliance
in the "war on terror."
the US remains strong and resilient, and today's defeats don't spell
its demise or even signal retrenchment. With its power and resources,
it can blunder often as it has in the past, then rebound, and again
go on the attack as its doing in Somalia, continues against Cuba, and
against Hugo Chavez in Venezuela as it seeks a way to oust its Latin
American nemesis despite past failed efforts.
setbacks, America's imperial agenda persists, and here's how it functions:
"unequal" bilateral and multilateral trade and other agreements;
-- with lots
of help from willing "outside collaborators and subsidized clients;"
a "divide and conquer" strategy that worked in Yugoslavia,
did at first in Afghanistan (under tribal warlords) and apparently is
the scheme in Iraq with the Kurdish North already separate;
-- - political
destabilization, assassinations or coup d'etats to remove opposition
regimes and install compliant ones; and
or direct war as a last resort when others fail to accomplish regime
change; but even conquest doesn't guarantee success as Iraq and Afghanistan
prove; resistance builds, military costs mount, public support wanes,
allies withdraw support and the whole effort may fail but not deter
new ones at other times in other places.
- Imperialisms, Old and New
note that capital accumulation is the "fundamental driving force
of economic growth," has been for over 100 years, and occurred
in six phases:
industrialization in the 19th century up to around 1870;
-- the fusion
of industrial and finance capital and emergence of monopolies and territorial
divisions among imperial powers (the US, Europe and Japan) up to 1914;
war, depression, Fordism-type mass production, "taming of capitalism"
social reform and defeat of fascism to 1945;
-- the "golden
age" of capitalist high growth, decolonization, nation-building
and state-led "international development to 1973;"
crisis and restructuring in the 1970s; and
-- the age
of Washington Consensus neoliberalism, globalized trade, free market
"reforms" and "neoimperialism" to the present.
note that incomes across the world converged somewhat during the "golden
age of capitalism" post-WW II up to 1970 after which things changed.
Now after a generation under Washington Consensus neoliberalism, no
such convergence exists and the Global North-South disparity keeps widening
to the detriment of developing nations. North-based corporate giants
have grown so huge and dominant that the largest of them represent half
or more of the world's 100 largest economies. In addition, multinational
corporations (MNCs) "as a global entity" account for over
90% of world trade with 30 - 40% of it being intra-firm. The authors
argue that these institutions operate as "functional units and
an agency of economic imperialism."
the US alone held the "commanding heights" of the world economy.
Compared to today, the authors cite statistics that are staggering.
With 6% of world population, the US had over 59% of its developed reserves.
It generated 46% of its electricity, 38% of its production, and it held
half or more of world gold and currency reserves. Twenty-five years
later all that changed, and by 1971 a dwindling supply of gold and growing
trade deficit got Richard Nixon to close the gold window, abandon the
Bretton Woods system, and let the US dollar float freely in world markets.
Ever since, the greenback has been faith-based with no intrinsic value
and no longer "good as gold." Since it's uncollateralized
paper or fiat currency, it's strong when it's in demand but weak, like
today, when it's out of favor.
troubled 1970s, the US manipulated exchange and interest rates to improve
its export position, and in the Reagan era began a generational assault
on labor that ended the long-standing practice of industry sharing productivity
gains with its workers. Corporations also began relocating labor-intensive
production abroad to low wage countries that in the 1980s "became
a cornerstone of a new global economy." With it came foreign direct
investment (FDI) with the rest of the book focusing on its harmful effects.
point out that in 1970 a "triadic structure" (in the US, Europe
and Japan) characterized the world economy. However, after two decades
of restructuring, a different picture emerged with China and a group
of newly industrialized countries in Southeast Asia becoming the most
dynamic center of world growth with the US struggling to hang on to
its economic dominance even while its major corporations continue to
prosper because they operate worldwide.
corporate issue is productivity growth and how to overcome its pronounced
sluggishness. Solutions used embrace "technological conversion"
that includes new production, communication and transportation technologies.
It also involves an assault on labor that caused a sharp reduction in
its share of national income (10% alone from 1974 - 1983). It means
loss of jobs as well because businesses downsize and shift operations
abroad to low wage markets where workers are usually unorganized and
more easily repressed.
point out that by the 1980s "a new international division of labour
and a global production system were in place" in what emerged as
a "new world order" of global capitalism. New governance rules
were established that were embodied in the 1994-formed World Trade Organization
(WTO). By 1990, Washington Consensus neoliberalism became the "new
imperialism" with big demands that developing states privatize
public assets, deregulate their markets and open them to allow free
trade and financial flows.
system, MNCs are the world capitalist system's "basic operating
unit" and "key agents of US imperialism" that all too
often involves the projection of military power in the form of war.
Their success and profitability are vital to a healthy economy and a
thriving imperial project. The authors explain that the "US state
identifies the interests of corporate capital with the 'national interest,'
" and it freely commits the state's resources on its behalf for
that dual benefit.
- Foreign Investment at Work
1980s, MNCs were constrained under host country rules. But the "new
economic model" freed them to move almost at will as developing
nations began opening their markets, deregulating them, and welcoming
MNCs for the perceived benefits their capital and technological expertise
could provide. The authors explained the process and what happened under
by noting capital flows are public and private. The former is between
governments in the form of "foreign aid" gifts or most often
loans from the US-dominated IMF, World Bank and Inter-American Development
Bank that come with unpleasant strings. The private kind consists of
three main types: foreign bank lending from commercial banks or international
lending agencies, portfolio investment (PI) financial instrument purchases
like stocks and bonds, and foreign direct investment (FDI) that itself
comes in two forms.
the purchase of at least 10% of a foreign business enterprise's assets.
"Greenfield" FDI involves the creation of a new facility like
a factory while the "Brownfield" type buys assets of existing
firms through mergers or acquisitions. In Latin America in the 1990s,
over half of FDI was the latter kind.
of debt financing is then discussed with the authors noting at reasonable
levels it's vital for enhancing growth. But not to excess that got developing
countries in trouble for the past three decades. Even in the 1980s,
it became clear that debt levels were so high in Latin America they
made economic growth impossible. They also caused a debt crisis by mid-decade
that especially affected Argentina, Brazil and Mexico.
North thus needed Plan B to reduce the debt bomb to manageable proportions,
avoid default and allow troubled countries to maintain their payment
obligations. One measure taken was the so-called "Brady Plan,"
named for Ronald Reagan and GHW Bush's Treasury Secretary, Nicholas
Brady. The scheme was to forgive a small part of the debt and convert
the rest into Brady IOU Bonds repayable in the long term to make the
burden less onerous. It worked as no heavily indebted nation defaulted,
but they had to adopt fiscal discipline to do it: structural adjustment
privatizations, cuts in social spending, deregulation and more. These
nations also suffered zero economic growth, a sharp reduction of living
standards for its working people and producers, increased social inequity
and greater unemployment and poverty.
burdensome debt levels, FDI has also been a repressive instrument, especially
in Latin America with its investment-friendly climate. The amount of
it (as well as PI) was small until the 1990s but then grew dramatically
as part of a shift from debt to equity financing with the largest portion
of it going to large developing countries like Brazil, Argentina and
Mexico and to the eight largest ones in the world overall getting 84%
of it, according to World Bank figures. China got the most attracting
22% of all FDI since 1989 while Sub-Saharan Africa got nothing except
for South Africa. Post-2004, manufacturing in China, India and Mexico
got the largest FDI amounts, but natural resources and especially energy
are also important, and a trend toward investing in services (especially
telecommunications) is growing as well.
became the most favored destination for FDI inflows in the 1990s that
hit their peak in the 1997 - 2001 period because friendly regimes like
Cardoso's Brazil "bent over backwards" to accomodate it, mostly
through merger and acquisition privatizations. The authors review facts
they call "startling" and show how the "imperial-centered
neoliberal model has led to the long term, large-scale pillage of every
country in Latin America." In dollar terms, it amounted to $585
billion in interest payments and profits remitted mostly to US-based
MNCs. More revenue was gotten from royalty payments, shipping, insurance,
other fees plus billions of illegal monetary transfers by Latin American
elites to offshore accounts.
the sluggish regional growth in the 1990s - 3% a year, then 0.3% in
2001 and 0.9% in 2002. It's because of exploitive resource transfers
and capital flows large enough to have made Latin America "one
of the economic pillars of the US empire." Some of the transfers
are hidden, and the authors put them in two categories:
neoliberal structured international trade with open Latin American markets
for US exports and reciprocal controlled ones in the US; the formula
the authors describe is to export capital to the region in the form
of FDI and import raw materials in return.
capital-labor relations with workers very much on the short end; the
authors note how the "organization and export of labour" is
used to pillage a country's resources and transfer them north; they
cite one 2003 study estimating the net gain for the US and corresponding
loss to Mexico of about $29 billion a year because of migration - indirectly
through repatriated maquillardora profits and directly through exported
farm labor and educated Mexicans who represent 40% of the nation's migrants
benefitting the US at Mexico's expense.
- The Social Dimension of Foreign Investment
cite the justification "development economists" give for keeping
labor's share of national income low. They claim it's because economic
growth depends on capital accumulation, and households have a "low
capacity to save and invest" since they spend all they get. The
rich, in contrast, have a high propensity to save and invest so the
more income they have the greater the economic benefit. In the 1970s
and 80s, this kind of reasoning led to a class war between capital and
labor with wages in the US losing 10% of their value from 1974 to 1984
and in Latin America and Sub-Saharan Africa even more - 40% in Chile
and Mexico and 50% in many other countries.
economic growth under the neoliberal economic model centered around
FDI. It promised prosperity but delivered failure. After 20 years at
the end of the 1990s, average per capita growth overall was cut in half
from the earlier period of "state-led development." It was
reduced to 1.5% from 3% in industrialized countries and in developing
ones (excluding China and India) to 1.2% from 3.5%. For the poorest
countries, it was even worse going from 1.9% to a negative 0.5% per
year. The only exceptions were a group of eight Asian "rapidly
growing countries" whose governments followed a policy of state
intervention outside the neoliberal model and proved their way works
cite data to show, aside from China and India, that the "neoliberal
era of globalizing capital and neoimperialism" led to rising worldwide
income inequality between richer and poorer countries and between higher
and lower income classes within countries. They explained that "Of
the countries with the highest indices of poverty, social exclusion,
and income inequality 41 are in Africa; 10 in Asia; and six in the Americas,"
and per capital income in all developing regions (except South and East
Asia) declined compared to industrialized OECD states. During the two
decade neoliberal period, inequality between rich and poor nations nearly
doubled. It proves how false the notion is that unfettered free market
forces create a "trickle down" effect to the poor that lets
them benefit from economic growth. Just the opposite happened and it
show how the "magnitude of the global income divide and associated
problems is staggering" with the richest population quintile consuming
86% of all products and services and the poorest one only 1.3%. And
the social inequality fallout is even worse - high unemployment, desperate
poverty, malnutrition, untreated illnesses and low life expectancy with
hundreds of thousands of needless daily children's deaths. And yet economists
at the IMF and World Bank continue to tout the benefits of neoliberal
"structural reforms" in spite of clear evidence they fail.
In the pre-neoliberal 1950s, 60s and 70s, income inequality decreased
overall but has increased in most countries since then. Again, the culprits
are privatization, financial "liberalization," deregulation
and downsizing with governments exploiting working people for capital.
for example. It has 11 billionaires with combined incomes exceeding
the total for the country's 40 million poorest. But the same thing is
true everywhere with developing nations faring the worst. It affects
2.5 billion people in the world who are unable to meet their basic needs
of food, shelter, clothing and medical care let alone education, clean
water, adequate sanitation and other goods and services people in the
West consider essential and take for granted.
America as an example, the authors show how capitalists in the region
sustained their profits by exploiting ordinary workers. During the neoliberal
period, labor's share of national income was cut from 40% to less than
20%. Even today in countries like Venezuela (with all its social gains
under Hugo Chavez since 1999) and Argentina, worker wages are still
below their 1970 levels. It's because of market deregulation that give
employers arbitrary power to fire workers, cut wages and hire temporary
and casual labor. It's gotten bad enough to hit the middle class as
well and cause a rising level of urban poor. A "new urban poor"
has emerged who aren't simply "rural migrants" but include
"socially excluded and downwardly mobile workers and the lower
middle class (who've been fired) and have found (other) employment in
the burgeoning (lower-paying, less secure) informal sector."
the unemployed and "rural-to-urban migrants" constitute a
reserve army of labor that keeps wages in the formal sector down and
workers' bargaining power weak. Then there's the notion of "social
exclusion" reflecting the condition of the poor with the authors
identifying its six "major pillars:"
production dispossession showing up in landlessness and rural outmigration;
-- no access
to urban and rural markets or for wage employment;
-- no access
to "good quality" employment;
access to government social services;
-- no access
to adequate income; and
-- no political
15 - 20% of Latin Americans enjoy a "First World" lifestyle
with the authors citing their array of luxuries that are unimaginable
to the poor and most middle income earners. And whatever the economic
condition, they benefit from the imperial system regardless because
neoliberalism works by taking from the exploited many and giving generously
to the privileged few. Put another way, it's a hugely out of balance
give and take, and it was set up that way despite its proponents denial.
review the period when the World Bank discovered poverty and carried
on its kind of three-decade war against it that was the equivalent of
fighting fire by throwing fuel on it. Readers know the drill by now
- governments getting out of the way and promoting unfettered free market
policies, pro-growth, structural adjustments and the rest of the package
favoring capital over people on the nonsensical claim they'll benefit
eventually. By now Latin Americans know "manana" never comes,
and even some World Bank economists like Joseph Stiglitz figured it
sum up three decades of World Bank efforts saying we're "where
we were in the 1970s and in a number of ways further back," especially
with regard to greater poverty that's now hitting the middle class.
Based on incontrovertible evidence, social inequality and poverty at
the end of the 1990s stem from the "pro-growth, pro-poor"
World Bank "imperialist policies" and the FDI regime along
with deregulated, unfettered markets giving capital free reign to pillage
for profit. But there's hope in the form of resistance with the authors
stating "capitalist development in its neoliberal form is clearly
on its last legs." For the poor of the world, it can't come soon
- Policy Dynamics of Foreign Investment
authors examine the record of FDI since 1980 when markets were deregulated
and capital flows were "liberated from control." Again they
cite the notion that economic growth depends on the accumulation of
capital, developing countries are deficient in it, and private multinational
commercial and investment banks and MNCs will ride to the rescue with
FDI. And while capital fuels growth, international trade is "one
of its driving forces." Two models are considered. One gives the
state an active role, and it worked during the 1940 - 1970 "golden
age of capitalism" period. That's when "international development"
meant per capita economic growth based on "industrialization, modernization
and capitalist development."
came to an end in the troubled 1970s, and a "counter-revolution
in development thinking and practice" took over. The scheme that
became neoliberalism turned capital towards exports and induced governments
to cut social benefits to raise levels of savings, productivity, profits
and productive investments.
economists were tasked to create the new model that became its Structural
Adjustment Program (SAP) with eight major components:
currencies for stability;
market and trade "liberalization" meaning unfettered free
market "reform" meaning lower wages and loss of worker rights;
policy formulation and decision-making; and
-- a free
market for capital, goods and services meaning all benefits accrue to
the Global North by pillaging developing nations.
Bank economist and neoliberal critic, Joseph Stiglitz, called this package
the "steps to hell" two years after he resigned his position
in 2000. All the evidence to date proves it with the authors stating
"the neoliberal model of capitalist development (is) unsustainable,
(it's) both dysfunctional and politically destabilizing." Confirming
data and examples are cited throughout the book, but in this chapter
Mexico is featured in great detail from 1980 - 2005. It's covered under
four presidents with each in his own way outdoing or at least matching
the excesses of his predecessor with the people of Mexico the poorer
can only touch on that period briefly beginning with Miguel De La Madrid
(1982 - 1988) who was the first to begin reversing a state-led approach
to relieve the "debt crisis" stemming from the 1976 - 1982
period of over-borrowing. It was IMF to the rescue with its usual package
of "reform" measures to "liberalize" capital, encourage
exports, deregulate markets, devalue the currency, and demand fiscal
discipline and privatizations. De La Madrid obliged.
Carlos Salinas de Gortari (1988 - 1994) who introduced a second round
of structural reforms. It included over 1000 more privatizations that
sold off the most important state enterprises like the banks and state
telephone company, TELMEX. The international financial community loved
him, but his term ended in tatters when the economy crashed in 1994.
Ponce de Leon (1994 - 2000) inherited the mess that broke out right
after he took office. With help from a $52 billion US bailout, he responded
with a "stabilization program" that included deep social spending
cuts and a 43% peso devaluation that caused inflation to rise 52%, thousands
of businesses to close, real wages to drop 25%, and two million people
to lose jobs. Zedillo was also Mexico's first president under NAFTA
that went into effect January 1, 1994. And he continued neoliberal "reforms"
and even exceeded his predecessor's commitment to global capitalism.
So did Vincente
Fox Quesdad (2000 - 2006) in his zeal to live up to his PAN party's
rightest agenda compared to the more centrist PRI during its continuous
72 year rule. The PAN under Fox practiced fiscal conservatism and free
market economics that maintained the neoliberal agenda of his predecessors
even in the face of widespread opposition that constrained him from
going further. The authors state that the Fox era "brought an end
to a cycle of neoliberal policies." His administration failed to
achieve sustainable growth and showed "the neoliberal model is
economically dysfuntional and has exhausted its economic limits."
- Foreign Investment and the State
dominant theme is how harmful FDI is to developing nations even as it
pretends to be beneficial. Most of it is also "subsidized and risk-free"
to investors, and "relies on securing monopoly profits (by buying)
state enterprises (on favorable terms) and control(ing)....strategic
markets." Much or most of it provides no new productive investment
recipient countries need to grow, prosper and help their people.
rightfully describe the process as pillage. State-owned assets are transferred
to private hands, and revenues that once went to national treasuries
now go to corporate coffers. Further, deals are justified on the false
claim they increase competition. False. All they do is put existing
enterprises under new management, and in the case of "natural monopolies"
like public utilities, it allows private owners to hike prices substantially
and price the country's poor out of the market, but that's just for
make big demands, and host countries oblige - tax deferrals and exemptions,
direct subsidies, infrastructure development, free or low cost land,
deregulation, assumption of "transition" costs of the inevitable
downsizing that follows, legal security protection through bilateral
investment treaties (BITs), labor training, and more. Other schemes
are in the form of Trade Related Investment Measures (TRIMs) and Trade
Related Aspects of Intellectual Property Rights (TRIPs). And when nations
balk during WTO trade talks, like in the faltering Doha Round, they're
pressured to come around through bilateral deals with neighboring states.
kind of advantaging, local enterprises don't stand a chance, especially
small ones. They nearly always lose and end up being bought, becoming
a satellite supplier, or going bankrupt. Labor also loses out. Wages
are frozen or cut, benefits slashed or ended, job protection ends, working
conditions deteriorate, unions weakened, and inequality grows as the
wealth gap widens substantially. In short, FDI works one-way - all for
capital at the expense of developing economies and its workers. An alternative
development strategy is needed, and it's readily available to states
willing to buck the system, withstand the pressure to conform, and go
- Anti-Imperialism and Foreign Investment.
authors first identify the myths about foreign investment that are needed
to sell this snake oil to developing states. Seven of them are briefly
growth depends on FDI; false; in fact, FDI is attracted by economic
-- FDI creates
productive, competitive new enterprises; false; it mostly buys existing
ones, transfers little new technology, does little or no new research,
and crowds out local enterprises;
-- FDI provides
links and access to foreign markets; false; it's often used to buy natural
resources for export and to repatriate profits and eliminate jobs;
-- FDI provides
tax revenues and hard currency earnings; false; revenues are repatriated,
tax fraud abounds, and the impact on the balance of payments is negative;
-- Good financial
standing and integrity of the system depends on maintaining debt payments;
false; much past debt is odious and servicing it harms local economies
and in the case of Argentina led to an economic collapse in 2001;
nations need FDI for development for lack of local sources; false; most
FDI is national savings borrowing to buy local enterprises; it doesn't
inject new capital into economies; and
-- FDI provides
an anchor for new investment; false again; the opposite is true as investors
freely relocate to lower-wage countries creating a boom and bust environment
when they arrive. Bottom line - FDI is poison unless used moderately
and is tightly controlled.
present arguments for and against FDI with the latter only considered
-- FDI strips
states of their ability to control "investment decisions, pricing,
production and future growth;"
-- FDI results
in long-term capital outflows repatriated to corporate coffers;
-- FDI results
in "unbalanced and overly specialized production," especially
in commodity areas;
-- Tax, subsidy
and other concessions to FDI deprive developing states of needed revenues;
-- FDI most
often only puts existing enterprises under new management; it seldom
creates new ones;
-- FDI creates
"enterprise enclaves," imports technology linked to "outside
production and distribution networks," and doesn't help local economies;
-- FDI often
controls local banking that lets it "shape state credit and interest
policy" and decide what industry sectors to favor and at what cost;
-- With investors
attracted to extractive industries and freed from regulatory constraints,
environmental devastation results.
In sum -
FDI endangers "national independence, popular sovereignty, and
severely compromis(es)" developing states' ability to control their
destiny and represent all their people. It's a "risky, costly and
limiting (one-way) strategy." Developing nations need to minimize
it because of its harmful economic, social and political costs.
- Anti-Imperialist Regime Dynamics
to Margaret Thatcher's TINA dictum (there is no alternative), many others
are better and the authors list them:
of profits into local production to stimulate a "multiplier"
effect and increase local consumption;
foreign trade to retain foreign exchange earnings;
pension funds in productive activities;
development banks for overseas workers' remittances home so funds can
be used productively;
a moratorium on debt payments to stop servicing the odious portion of
stolen treasury funds and property;
land taxes and expropriate or buy underutilized land to be used for
agrarian reform and greater agricultural productivity;
overseas investments and reinvest them locally; and
employment and reduce underemployment.
where a country's taxable resources and overseas earnings are limited,
FDI can help if used moderately and constrained. Ways to do it include
maximizing "strategic national ownership and control" and
relying on short-term deals that include training workers and contracting
with skilled advisers for whatever technical help is needed.
model reviewed is WEPC - Worker-Engineer Public Control or worker-managed
enterprises (WMEs). Salvador Allende used them in over 100 factories
in Chile while he was in office. They attained greater productivity,
higher worker motivation and achieved significant social, health and
working conditions improvements while they remained in place. WEPCs
aren't problem-free, however, and the main one is they're targeted by
imperial states for destruction because their policies aren't corporate
friendly. Nonetheless, their advantages greatly outweigh the negatives.
tax evasion to increase state revenues;
investment in lieu of repatriated profits;
of capital flight;
long-term R & D over speculative investment;
welfare and betterment over savage capitalism; and
capital and upwardly mobile labor over mobile capital and fixed labor.
persuasively show that FDI is a cancer. Once established, it spreads
like a virus, "corrupt(ing) local officials, brib(ing) regulators
(and) present(ing) a different 'role model' for state executives - one
attuned to luxury living, big salaries, privileges, and, above all"
a neoliberal ideological commitment. Another way is possible and vital
to the health, welfare and growth of developing nations. It "puts
the worker-engineer public sector-led model at the centre of development,"
and empirical evidence shows it works.
Lendman lives in Chicago and can be reached at email@example.com.
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