Re: Developments in the world economy and the concept of foreign ownership
On May 27, 2007, at 11:55 AM, Marvin Gandall wrote:
I have a question or, rather, one big one and a series of related
ones.
Coupla reponses.
If GM, Ford, and other American carmakers relocate the bulk of their production from Detroit to Shanghai,
We’re a long way from that. There’s a lot more production in Canada
and Mexico than there is in China, and that’s not likely to change
imminently. We’ll see what Cerberus does with Chrysler though, won’t we?
Remember, China is still a pretty small part of MNC operations. More
than half (56% in 2004) of MNC value added abroad is accounted for by
Europe; Canada, 11%; China, less than 2%. Much of the work in China
is done by subcontractors, who remain quite subordinated in the
ownership hierarchy. See the BEA’s latest at
But here too the trend is strongly in the other direction. The
“national” shareholding character of US and other leading multinationals is
becoming rapidly diluted as institutional and private investors from the faster-growing economies abroad acquire more ownership and control
- an outgrowth of the transformation of the developing countries from net importers to exporters of capital, and their growing interest in
equity investment.
Again, we’re a long way from that. About 12% of U.S. shares are held
abroad, and that’s probably inflated by the offshore holdings of
hedge funds, who are ultimately American. That share has doubled over
the last decade, but again, we’ve got a long way to go.
So far as I’m aware, most of the earnings of the multinationals are
not being repatriated back to their home countries.
Some are reinvested in the target countries. But as long as U.S. MNCs
report in dollars, have their HQ here, and have their senior execs
here, they’re still largely Americans.
And doesn’t it explain the insistent and increasing penetration of the Chinese financial sector by Wall Street and other European and
Japanese banks eager to tap these earnings, as well as the domestic savings
of the rapidly-expanding mass of Chinese consumers?
I think you’re exaggerating the size of the MNC sector in China.
They’re mainly after Chinese cash - personal and corporate - not
foreigners’.
I tend to think this accelerating interpenetration of global
capital in the world economy is no more reversible than was the consolidation of
local and regional markets into national ones. If that’s the case, it challenges classical nationalist and Marxist concepts about foreign ownership
and the inevitability of inter-imperialist war
I’ve just been reading Sven Beckert’s excellent history of the New
York City bourgeoisie’s emergence in the 19th century. It’s
impressive how eager New York merchants and bankers were to appease
the South during the 1850s: they just wanted to do business. (A
hideous business it was: exporting slave-grown cotton to England, and
importing the textiles and apparel made from that cotton, and selling
it to the rest of the U.S.) It makes me wonder who really drove all
that inter-imperialist war in the 19th and early 20th centuries. My
pal who’s doing a diss on the City of London says the City didn’t
want WW I - the politicians did. The City was making too much money
floating securities for Germany. More recently, I don’t think it was
even the oil industry that pushed for the invasion of Iraq; that came
from politicians and right-wing intellectuals. Now they may have a
“better” grasp of the long-term interest of capital than the
capitalists themselves, but a lot of capitalists just prefer the
status quo to something as risky as war.
Doug