Re: RE economic globalisation

[P8475423@xxxxxxxxxxxxxxxxxxxxxxxx]

In relation to transnational corporations, Will Brown
made the following point:

|These companies produce all over the world,
|their shares are held and traded all over the world,
|they sell their products all over the world.
|This must mean something to the nation state.

This is probably a good point to reply to Nello's
requests on monetary issues--and there were enough
questions there, Nello, to fill several books, which
I certainly don't have time to write, and I doubt that
anyone else on the list does either; but I'll touch
on a few.

The first point to make in relation to Will's comment
is that, prior to the widespread dominance of world
trade by transnationals, you could largely see
countries and corporations as co-extensive, so that
relations between countries--trade--meant relations
between corporations, too.

Now relations between countries can be operations
*within* the one firm.

Before TNCs ("BTNC"), government actions to try to
manipulate their relations with other countries would
have a largely uniform effect on their corporations on
the one hand, and foreign corporations on the other.
After TNCs ("ATNC"--far more relevant than "AD", I think!),
the effects are far from uniform.

ATNCs, the corporate motive to maximise profit can
therefore cut across, perhaps undermine or exploit,
government manipulations intended to increase a
country's welfare. Perhaps the most important
example of this was the behaviour of US TNCs either
side of Nixon's decision to break with the gold
standard, thus bringing to an end the period when
the Bretton-Woods agreement governed world trade.

US transnationals were expecting a devaluation. So,
in an attempt to both avoid losses and profit from
one if it occurred, then manipulated their overseas
dealings (as one example, the vast majority
of them changed their credit terms) to minimise
their holdings of US dollars and maximise those of
other currencies.

This action so devastated the US's foreign reserve
holdings that it precipitated the devaluation they
were expecting. (The source for this claim is the
well known bastion of radical left-wing conspiracy
theories, the US Congress, on the basis of a
detailed inquiry it commissioned after the event.)

Similar games are behind the dramatic increase in
financial instability post-73 compared to before it:
financial manipulations which would previously have
been contained within one nation state now cross
world boundaries, compounding inter-country
fluctuations on top of corporate ones.

A case can also be made that relocation of
production by transnationals in search of lower
wages, motivated by a desire for higher profits
as usual, ends up doing far more to increase
intra-national inequality, and reduces aggregate
demand.

There's lots more to be said--but I haven't got
time to write a book!
Cheers,
Steve Keen


     --- from list marxism@xxxxxxxxxxxxxxxxxxxxxxxxxx ---

     ------------------