It is now generally accepted that the expansion of the multinational corporation is a major, perhaps the major, phenomenon of the international economy today. Large corporations with their headquarters in the United States, in other Western industrialized countries, and now increasingly in Japan as well, are expanding their activities both into industrialized countries, including the Soviet sphere, and into the less-developed world. Once heavily concentrated in mining and extractive fields, today it is the manufacturing activities of the multinationals that command growing attention.

The political consequences of this transformation have now become the subject of a vast and growing literature. Much less attention, however, has been devoted to the impact of the multinationals on the work force within the affected nations.1 Striving to come to grips with the rapidly changing pattern of production in the world, organized labor fluctuates between attempts to negotiate directly with the multinationals on their own ground wherever they may locate-a transnational strategy, if you will-and attempts to use their political leverage within their own nations in order to regulate and control the multinationals and thus to protect jobs within each nation.

In short, labor today has managed to generate only a confused, partial and lopsided response to the multinational corporation. To understand why this is so, it is necessary first to analyze the total impact of the multinational corporation (MNC) not merely on organized labor but on the total social structure and work force patterns of the affected nations. From such an analysis one can begin to grasp how truly drastic and dramatic the effect of the MNCs has already been and how over time that effect is likely to increase.

There emerges a reasonably clear conclusion that with rare exceptions organized labor henceforth is not likely to pursue the transnational strategy except in a minority of cases. Rather, the efforts of organized labor will be focused more and more heavily on moving national and international regulation of the multinationals in the direction of fuller control over their impact on jobs. The larger questions of what effect organized labor's response to the multinationals may have upon the direction and pace of social change and thus upon the welfare of the work force throughout the world remain open. But the options for labor can now be seen as bifurcating toward either a more egalitarian world or, alternatively, one determined by the protection of acquired positions.


The question of labor and the MNC has often been discussed as though the working people concerned were just the employees of the MNCs. This is far too restricted a perspective within which to evaluate the social consequences of MNC expansion. In the broader context required to assess social impact, the expansion of MNCs must be seen as a principal dynamic factor in a far-reaching transformation of the world economy which is affecting the whole world labor force. Among the workers affected, those directly employed by MNCs are a minority and on the whole a relatively privileged one.

The advocates of the MNC often describe it as an engine of development. What they usually mean by this is that MNCs can increase growth, measured in production and incomes. In aggregate terms, this is a defensible proposition, but it begs the question: what is development? Whatever precise meanings may be assigned to it, development is a normative and purposive concept, and can never properly be reduced to an accounting aggregate like Gross National Product.

Contrary to the engine-of-development thesis, it has also been cogently argued that the kind of growth promoted by MNCs produces dependency and underdevelopment.2 The concept of development connotes an element of equity, of widespread participation both in the processes of production and in the enjoyment of the fruits of production. One criterion for judging whether or not MNCs are engines of development is to look at the consequences of their expansion as regards participation in employment and incomes for the labor force as a whole.

The expansion of the MNC can be directly associated with a change in the international distribution of economic activities. A major initial impetus to foreign direct investment was the desire to develop and control supplies of raw materials-minerals and tropical agricultural products-upon which the continuity of production in industrially advanced centers depended. This classic type (petroleum, bauxite, copper, and plantation crops) is no longer so characteristic as it once was of the MNC. The more recent and now much more characteristic aspect of the MNC's expansion has been the growth of international production-manufacturing in foreign-owned plants, which has been the world's fastest growing "economy" of the past decade, and has become the principal participant in international trade. In part, international production has taken the form of the creation or acquisition of plants by foreign owners to supply domestic markets, profiting from the monopolistic advantages of the big corporation (access to financing, knowledge of markets, product differentiation, a corner on some piece of technology) in competition with local industries and-as in the case of the European Economic Community (EEC)-operating within tariff walls. More recently, international production has taken the form of direct investment in "export platforms" provided by less-developed countries.

The importance of these changes can be seen in the auto industry: in 1950, 80 percent of world auto production was in the United States; by 1972, the United States accounted for only 32 percent, Western European production had risen from 15 percent to 35 percent of the world total, and Japan (with Brazil) had moved from one-third of one percent to 18 percent of the total. Since world production had expanded more than threefold during this time, there was no absolute drop in U.S. auto production, but the world distribution had shifted markedly.3 All major automobile-producing companies had, by the latter date, become multinational producers. The shifting international distribution of production was reflected in significant intra-corporate shifts in the location of production. Looking ahead, it seems likely that the international distribution of the industry will show an increased share going to the industrializing less-developed countries and to the U.S.S.R. and other socialist countries.

The automobile industry is characterized by high technology, though still relatively labor-intensive. In more labor-intensive lines of production, such as textiles or the manufacture of electronic components, the movement of industry toward the less-developed areas has been even more marked. Automobile production is geared rather more to domestic and regional markets than to distant exports, though Japanese and Russian automobiles have a share of the European market, and Europeans and Japanese currently a large share of the American market. But increasingly, in the most labor-intensive lines, MNCs have set up manufacturing plants in less-developed countries to build components or products primarily to export to their home country or other relatively rich-country markets.

The importance of the "export platform" for U.S.-based industries can be gauged by the fact that the aggregate of U.S. foreign subsidiaries by 1968 had become an exporter in world markets as large as Germany and twice as large as Japan, and that much of these exports of U.S. subsidiaries were coming into the United States as imports-to the extent of one-fourth of all U.S. imports.4 The readiness of the U.S. government, under pressure from UNCTAD and Latin American countries, to reverse its opposition to the generalized system of preferences for manufactured exports from the less-developed countries may be critically appraised in the light of the fact that so substantial a part of these exports now entering the U.S. market are the produce of foreign subsidiaries of American companies.

In the most general terms, these trends show a shift of industrial manufacturing away from the most advanced economies toward those countries now in process of industrialization, while the control centers remain in the more advanced countries. European production expanded rapidly from the late 1950s, and more recently the most rapid expansion has been in countries of the western Pacific and a few others like Brazil. Japan, once in the lead in pace of growth in the Pacific area, has become a relay furthering growth in less-developed countries like South Korea, Taiwan, Hong Kong and Singapore. The more advanced economies, meanwhile, turn toward a "post-industrial" structure of the labor force, with a declining proportion in manufacturing and an increasing emphasis on sophisticated services-on software rather than hardware.

For the labor force as a whole, the central issue posed by these changes in the structure of the world economy concerns employment. In the rich countries, can the growth of services compensate for the decline in manufacturing jobs? In the industrializing countries, will the growth of industry, rapid as it has been in countries like those of the western Pacific and Brazil, make a significant dent in widespread unemployment and underemployment? And will the poorest countries of all ever get some share of the action? These long-range questions are currently posed in a context of world recession outside the socialist countries, of a dramatic international shift in monetary reserves consequent on the increased cost of petroleum, with as yet unresolved implications for world monetary relations, and of a new awareness of the finite limits to the earth's ecosystem which cautions against thinking that all economic and social problems can be solved ultimately through economic growth.

In the more advanced industrial societies, organized labor has raised a number of alarm signals. In the United States, the AFL-CIO seeks government controls over MNCs that will limit the movement of production abroad by U.S. corporations so as to stop the "export of jobs." MNCs reply to organized labor that they are in fact creating more jobs at home. Many of these new jobs, however, are unlikely to be available to the displaced workers. Openings for systems analysts may not be very helpful to redundant auto assembly workers. Jobs lost and jobs created cannot be neatly balanced but have to be looked at in the more personal terms of the transferability of individuals with particular skills and habits-and in North America today, there is little confidence that the labor market is equipped to ease the transition of displaced workers satisfactorily.

Regarding the employment consequences of international changes in production, there appears to be a contrast between the United States and Japan, on the one hand, where corporate decisions are shifting the more labor-intensive production away from the home country into its external economic periphery (often to the same export platforms of the western Pacific and Latin America), and West European countries, on the other hand, in which less productive work has devolved to an imported lower wage category of immigrant labor from the Mediterranean countries, thus transforming a geographical periphery into an internal social periphery. Most of the concern voiced in Western Europe in recent years about this question has been over the issues of inter-ethnic relations and the encounter of contrasting cultures. This has led some West Europeans to argue for restriction of alien workers, while others point to inequities in their status and conditions. Until recently, the prospect of unemployment has not figured in the debate.

There are now, however, indications of a more acute concern about jobs. In part, this is because the recession has brought to Western Europe levels of unemployment less than those of the United States but still well above those regarded as politically safe. But in part the growing concern in Europe is with longer-term factors: with an outward flow of direct investment from the EEC countries and a fear that Europe may be but a temporary stopping place for U.S. capital in its secular movement toward lower labor cost areas.

In the less-developed countries, the employment prospects are even more pessimistic. The technology transferred from mature industrial countries has not expanded employment commensurate with increases in the labor force and declines in agricultural labor. Exhortations in favor of the development of more labor-intensive technology have not made much impression either on governments seeking new industrial investment or on potential investors who already have a stake in the technology they bring. The marginal populations of the Third World-those who have left rural pursuits without having found an established place in urban employment-now are estimated at close to one-third of the labor force, with no signs of their numbers abating.

Thus in all these different areas of the world, the employment consequences of the expansion of international production appear rather grim, accentuated by recession but traceable ultimately to continuing long-term structural changes. Unemployment, of course, hits some people more than others. Its social impact is differentiated by the structure of the labor force.

The concepts of primary and secondary labor markets, introduced by some labor economists, are useful in explaining this differential impact.5 These economists observed that many workers are in enclosed internal labor markets, which they entered at an early stage in their employment history and within which they have some opportunities for career development. These may be big public or private corporations, or else an industry in which the conditions and status of workers are regulated by powerful unions, as in construction. These more established workers are in the primary labor market. They tend to be those with the higher skills, better pay and most effective union organization. The secondary labor market conforms more closely to the classical concept of a market in which the price of labor is determined by supply and demand. Employment for secondary labor-market workers is more unstable, there is greater turnover of jobs and little career development. These are the more expendable workers, less skilled and less well protected by unions. Ethnic discrimination and low social status frequently add to these disadvantages.

As is all too evident today, secondary labor-market workers are disproportionately hard hit by unemployment. In the United States, blacks, Puerto Ricans and Chicanos are numerically prominent among the unemployed. In Western Europe, the greatest impact of prolonged unemployment falls less heavily upon the industrialized center than upon the periphery-upon Portugal, Spain, Greece, Turkey and southern Italy, whence came Western Europe's secondary labor-market workers. This impact upon the southern rim of Europe only increases its political volatility.

Prevailing employment patterns also have political implications in other less-developed countries. The explosive potential of a large socially marginal population in these countries is now contained by two factors. One is the lack of any unifying consciousness of revolt among marginals themselves, who initially have been more susceptible to the consumption culture exported by more affluent societies, or to messianic illusions prompted by despair, than they have been to revolutionary action. The "wretched of the earth" have had their prophets from Michael Bakunin to Frantz Fanon. Revolutionary guerrilla bands like the Tupamaros have sought cover and support among them. Radical labor movements like anarcho-syndicalism have at times drawn support from them. But marginals generally have not been aroused as a social class with effective and sustained cohesion comparable to that attained by industrial proletariats in late nineteenth century Europe and America, although in some parts of the world they may now be approaching this threshold.

The other containing factor is the effectiveness of repressive techniques for the control and suppression of such overt discontent as does appear, in the hands of the authoritarian governments which have become the characteristic sponsors of industrialization by means of foreign investment. The connection between political authoritarianism and the promotion of economic growth through foreign investment derives more from the logic of political economy than from an iniquitous conspiracy of foreign big business with corrupt local politicians-although evidence of such conspiracies is not lacking of late. The pattern of growth promoted by private foreign investment has accentuated the discrepancy between geographical poles of growth and the hinterland-between the São Paulos and the Nordestes-and has exacerbated inequalities in the distribution of incomes between social groups within countries, in large part because of the very limited employment-creating effect of this kind of growth. Regimes which rely substantially upon MNCs to produce growth have consciously sacrificed the "less fit," among whom the social marginals loom larger and larger.6 This is politically possible only if the less fit remain unable to protest effectively, and if such protest as they do make can be effectively repressed. Repression becomes a political condition for a pattern of growth which generates marginality. But the coercive state has its own autonomy, and the military-bureaucratic regimes born of this process acquire through it also in time the ability to exact greater concessions from the foreign investors they have admitted.


Thus, a consequence of the internationalizing of production is the emergence of a global class structure somewhat modified from that derived from nineteenth-century production relations. The expansion of the MNC has been a major force in bringing this new structure of classes into being. Its outlines are as follows:

1. At the apex of the social configuration is a transnational managerial class. This includes the administrators of MNCs, the associated economic diplomats, and many of the technicians in research and development and control systems. These people are transnationally mobile and may be expected to develop the kind of global outlook on their work that Howard Perlmutter described as "geocentric." Sharing many of the perspectives of this group and providing a framework of support for their activities are officials of intergovernmental organizations, e.g., the World Bank, the International Monetary Fund, U.N. Development Program, etc., and the larger network of experts associated in their work. Further support is found among personnel within the public policy-making institutions of national governments. Collectively, and despite rivalries attributable to particular interests, the transnational class seeks to establish a liberal world economic order in which stable and predictable conditions will be propitious for the relatively free international movement of factors of production. The outlines of an ideology expressive of these goals are already clear-an ideology that can be called "transnationalism" or "globalism," which sees the MNC as the engine of global development, and economic nationalism as the obstructive reflex of an obsolescent nation-state.

2. Beneath the transnational class stands a large class of established labor, established in the sense that its members enjoy relatively secure employment and, corresponding to this, a secure status in their local communities. These people do not move out of their own countries and rarely out of their own communities, in which they have a stake as more or less active citizens and often as small proprietors. They correspond to the primary labor market. This group has been the main object and beneficiary of the social institutions, the social legislation, and the institutionalization of conflict evolved in the industrial societies during the nineteenth and twentieth centuries. As such, the group has a high level of consciousness of its place and power in society. This consciousness has tended to take an instrumental form-a confidence in the group's ability to make the institutions of industrial societies work for its own protection and advancement.

3. At the bottom is a third group, varying in relative size, in some countries larger than the class of established labor, in others somewhat smaller. This group can be called the social marginals. (The designation of "class" may be disputed for this group, on the ground that class presupposes not only a specific relationship to the means of production, but also an awareness or consciousness of its position.) This group includes both those-particularly in the less-developed countries-who have been unable to find industrial employment, and also those-especially in the more industrialized countries-whose precarious employment is in the secondary labor market. The marginals pay the higher social costs whether of industrial growth or of recession.


It must be apparent that this description of the emerging social pattern, brought on largely by the expansion of the multinational corporations, does not conform to the historical pattern of social structure on which the organized labor movement of the United States and other industrialized countries is based. Clearly, if new social structures are, in fact, developing rather rapidly, a serious question is raised whether the classic relationship of labor and management as it has evolved in mature industrial societies-in effect a procedure for institutionalized conflict7-is capable of containing the potential for social conflict inherent in the emerging class structure.

Keeping this question in the back of our minds, let us now look at the record of organized labor's response to the challenge of the multinational corporation. Ever since the early 1950s, the dramatic spread of production in the automotive industry had led trade unions to consider ways of making their response more effective. In particular, the International Metalworkers Federation organized a series of world company councils in the automotive industry, bringing together representatives of the unions that deal with a particular company in the different countries in which the company operates.

Another widely noted development was the consultation instituted between the management of the Philips electrical concern and unions, in regard to questions of production and job security. Then, in 1969, there occurred a highly publicized confrontation of the French multinational Saint Gobain Company by a multinational group of unions coordinated through the International Federation of Chemical and General Workers. This event was certainly of no greater intrinsic importance than a number of other similar multinational trade union initiatives in automotive, electronics, chemical and pharmaceutical, rubber, petroleum, and air transport industries, but it constituted a public relations breakthrough following as it did upon a widely publicized stock market battle for the takeover of Saint Gobain.

Such events seemed to suggest that the continuing global expansion of MNCs would be accompanied by the emergence of transnational collective bargaining through a restructuring of trade unions along the lines of the MNC. This particular image of labor's response could be spelled out in terms of the development of a series of instruments designed to strengthen unions in relation to the corporation. The first stage in putting these instruments together is acquisition, coordination and analysis of information about the MNC. Further instruments in the trade union arsenal are support for union organizing efforts in countries where unions are weak or nonexistent; pressure on corporate headquarters to recognize and bargain with unions in other countries in which the corporation operates; banning overtime and other increases in work schedules in other countries in the event of a strike in any one country in which the corporation operates in order to prevent shifts in production; organizing consumer boycotts of corporation products; coordinating the terminal dates of collective agreements in different countries; and ultimately collective bargaining at the level of the corporation as a whole.

Of course, when contemplating this particular image of future global labor management relations, unions recognized the relative advantages of MNCs and their own areas of relative weakness in the development of these different stages of response. The advantages enjoyed by MNCs derive from their size and the very fact that, operating within several national jurisdictions, they can minimize or avoid some of the controls and the checks and balances evolved within the national framework of industrial societies. MNCs can maximize their advantages among different national jurisdictions as regards such factors as fiscal and labor market conditions, and by intra-corporate transfer pricing and other accounting devices can determine where to show their profits. These advantages MNCs can exploit actively and aggressively because they have sophisticated and centralized information and decision systems, compared with which governments and a fortiori trade unions are in a more defensive posture, lacking adequate information on which to base their action, and-with regard to trade unions in host countries-frequently unable to deal directly with the real locus of decision-making authority in the MNC.

The principal weaknesses of unions in confronting the MNCs can also be readily catalogued. As between developed and less-developed countries, there are marked differences in the organized strength of unions. In some cases, the availability of abundant, docile and cheap labor is a major incentive for MNCs to establish manufacturing enterprises in certain developing countries. Furthermore, unions fear that MNCs' use of manipulative techniques of sophisticated personnel management may undermine union organization.

Differences in ideological orientation and political affiliation have also left bitter feelings of mutual suspicion among labor leaders in some countries that continue to obstruct concerted action. In addition, the distance between the rank and file on the shop floor and the union leadership and staff, which has become manifest in most industrialized countries in recent years in the form of wildcat strikes and shop steward movements, would likely be further widened by the introduction of transnational bargaining which would be even more remote from the individual worker. What guarantees would there be that a multinational union could hold all its members in different countries to a centrally negotiated agreement?

Union efforts to overcome these weaknesses include support in money and personnel for organizing drives abroad, public denunciation and the building up of pressure against governments that obstruct union organization in the interests of attracting foreign investment for export industries, and initiatives to bridge the ideological gap and to promote contacts among erstwhile hostile union leadership-such as the initiatives toward collaboration among social democratic, Communist and (former) Christian trade unionists through the recently formed European Confederation of Trade Unions (CES).

The image evoked here of future industrial relations is one of a growing power of multinational unions gradually overcoming these obstacles so as ultimately to balance the power of the global corporation. States do not figure prominently in this scenario, because those who have cultivated this vision have tended to regard the state as an obsolescent structure.

The United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) has been the major single source of impetus behind this transnational strategy, though its exponents are now to be found well beyond the UAW itself. The UAW has been a preponderant influence upon the International Metalworkers Federation, which has become one of the principal vehicles for propagating and organizing the transnational approach from its headquarters in Geneva, Switzerland. And the leadership of the other international trade union body which has been most active in this direction-the International Federation of Chemical and General Workers-has at least an ideological affinity with the UAW. So striking is this point of origin of the strategy that the question must be asked whether the effort toward multinational bargaining is the extension abroad of a particular manifestation of U.S. trade union power, just as the expansion of MNCs was perceived abroad as an American challenge to weaker economies.

It would be an oversimplification, however, to think of the transnational strategy as the aggressive expansionism of American trade unions, and the national strategy as the defensive reaction of unions abroad. In the United States, only a minority of union leaders have been aligned with the UAW in practical support of the transnational strategy, while outside the United States the UAW has found some allies to participate in the strategy.


The alternative to this transnational strategy has been what might be called a national strategy, in which trade unions apply their political strength as pressure on the government to control MNCs in the interests of labor, as well as using their economic strength locally in bargaining with MNCs. The aim of this strategy is to ensure that state controls eliminate the special advantages MNCs enjoy because of their ability to operate in a number of countries. In countries where national entrepreneurship was highly developed before MNCs became prominent, state controls may take the form of reducing the advantages MNCs have over national enterprises. In this respect, there is a basis for support of the national strategy by both organized labor and national entrepreneurs. But the national strategy may also be more radical and far-reaching, envisaging nationalization and a socialist structure of the economy.

Basically, the policy followed by the AFL-CIO in the United States has been along the lines of such a national strategy in the nonradical sense. To understand why different segments of organized labor in different countries opt either for the national or the transnational strategies, it is helpful first to look into certain characteristics of union organization, which differ significantly from country to country and from industry to industry.

The transnational strategy is most likely to be adopted where unions are strongly organized at the plant level and relatively autonomous of central trade union organizations at the national level. In other words, the transnational strategy requires a fragmentation of national labor organization so that the segments relevant to a particular MNC, or industry in which MNCs dominate, can be integrated transnationally. These conditions are facilitated when employment in an industry is characterized by relatively small numbers of relatively highly skilled workers in technology-intensive operations. Such groups of workers can readily perceive the advantage their strategic position in the industry gives to them. Even where the general pattern of trade union organization is centralized, such groups of workers may be inclined to go their own way, maximizing their advantage independently. National patterns of labor organization vary in respect to this factor of centralization. The plant-based strength of unions in North America and Britain opens the way toward a transnational strategy more readily than do the more centralized union structures of continental Europe.

Ideology is another factor in the choice between transnational and national strategies. The fact that a relatively small proportion of the work force is unionized in North America encourages an ideology in which unions are regarded as instruments within an accepted economic system for protecting and advancing their members' particular interests. This essentially instrumental ideology is compatible with a transnational strategy. The much broader base of union membership found in Scandinavia and to a lesser degree in other countries of northern Europe tends on the other hand to sustain an ideology which sees unions as the vanguard of a movement to transform society in a spirit of solidarity with the least fortunate. Such an ideology of solidarity is a deterrent to the fragmentation necessary to the transnational approach. The discipline exercised by the central organization's control over the membership in Scandinavian labor organizations would obstruct any initiatives for independent transnationally coordinated bargaining in plants belonging to MNCs that could result in agreements out of line with the nationally negotiated agreements. For similar reasons, the powerful German metal workers union I.G. Metal has been less than eager to support the American UAW's initiatives toward using the IMF as a framework for implementing the transnational strategy.

A strengthening of shop floor movements, rebellious toward union leadership, which have become commonplace in Britain and increasingly so in other Western European countries, could bring about a loosening of central organization control in labor movements conducive to transnational confrontation of MNCs by plant-based revolts in several countries. Such a case did in fact occur in a simultaneous action by British and Italian employees of Dunlop-Pirelli. However, there are good reasons to believe such movements are unlikely to lead to formally structured multinational bargaining. Ideologically, shop floor movements have been more radical than the top union leadership and less likely to abandon the concept of solidarity in favor of instrumentalism. And structurally, local plant-based movements are likely to resist ceding their power to a multinational union with a company-wide base that would in effect remove labor relations from the direct workplace control which was the raison d'être of the shop floor movements in the first place.

The extent of trade union influence over the general economic environment of labor is a further factor. The chief objection by the AFL-CIO to the MNCs is that they export jobs from the United States. The same objection is not voiced by labor organizations in Scandinavia. The difference is explained by the degree of control Scandinavian labor has over the labor market. The effectiveness of adjustment assistance to displaced workers through active labor market policies in Scandinavian countries, achieved through a labor market system shaped and influenced very largely by the trade unions, enables the labor movement to give priority to economic modernization over the protection of specific jobs. Scandinavian trade union organizations have taken a benign view of the exporting of lower productivity types of employment to poorer countries. By contrast, American unions lack the same degree of confidence in the adjustment assistance measures written into U.S. trade legislation, and are more concerned to maintain existing jobs than to rely on upgrading and reemployment of displaced workers.

Both the Scandinavian and the American situations in this respect, it should be noted, are conducive toward the national strategy, the one in a spirit of confidence, the other of pessimism. The transnational strategy is more likely to be followed when unions are neither committed to national economic and labor-market policy nor feel especially threatened by job displacement to other countries. Since job displacement can become a threat under changed economic conditions, the propensity toward a transnational strategy may prove to be unstable and transitory. The recent history of the UAW offers a test case of a union which had led in promoting transnational action being driven as a consequence of massive layoffs in the automobile industry into a more defensive and protectionist national strategy.

Sometimes the rhetoric of union leaders and the language of tactical statements by trade union organizations about MNCs create confusion as to their basic strategic positions. The Communist-controlled World Federation of Trade Unions (WFTU) and the French Confédération générale du travail (CGT), for example, have issued statements asserting that the expansion of MNCs should lead to greater international collaboration among trade unions of different ideological persuasions-statements which seem to read like an endorsement of the transnational strategy. There is, however, a fundamental difference between the CGT, which sees the MNC as the highest form yet reached by the world capitalist system-a system which the CGT fundamentally opposes and seeks to transform into socialism-and the supporters of the transnational strategy who see the MNC as an efficient economic structure from which organized labor can extract greater benefits. The CGT's policy represents a radical variant of the national strategy; it proposes to attack capitalism through political and trade union action at the national level, while recognizing that the success of this enterprise within one country will be dependent upon the strength of the forces simultaneously opposing capitalism in many countries.

Weighing these various factors, the general conclusion emerges that at present the factors conducive to the national strategy predominate in labor movements in all parts of the world, and that a substantial development of transnational union bargaining with MNCs is an unlikely prospect, contrary to some recent speculation in this sense. The impetus behind the transnational strategy which came from the United States has been dampened at least momentarily by the recession, while the strength behind national strategies in the United States and elsewhere has grown.

This conclusion conforms with analyses which suggest that the relatively uncontrolled expansion of MNCs reached a peak on the threshold of the 1970s, and that the future is likely to see increased national controls over the MNCs by both host and home countries.8 The image of a transnational countervailing power of trade unions arose at a time when states seemed to have let a good deal of control slip from their hands. With states in both home and host countries now more effectively back in the picture, trade unions are likely to direct both their economic and political power to influence state action.

Wherever the transnational strategy is maintained, it seems likely this will be by elite groups of workers who perceive their advantage in a symbiotic relationship with the MNCs. Insofar as such groups of elite workers are successful, the welfare implications for workers as a whole would be regressive; the gap between those within and those outside the symbiosis would widen. Thus the transnational strategy could provoke a reaction from the less favored group outside. The transnationalism of a new labor aristocracy would be confronted by the nationalism of the less favored majority of workers.


If the main thrust of organized labor with respect to MNCs seems likely to be toward securing more effective public regulation, in ways that would protect and advance labor interests, the next questions to be considered are: What kinds of regulation of MNCs can be envisaged?9 Which of these kinds of regulation is labor most likely to support?

At present, no international regime of rules or regulations exists for MNCs as such, much less in regard to the implications for labor of MNCs. International labor standards have, of course, been adopted through the procedures of the International Labour Organisation (ILO) which are applicable generally without distinction between MNCs and other employers. The ILO's standards are in the form of model provisions designed as guidelines for enactment through national legislation or practice; they do not constitute anything like an international jurisdiction administered by an international authority to which MNCs could be made accountable.

Since the MNCs operate beyond the jurisdiction of an individual state, the question of an international regulatory authority has been raised along with other more conventional proposals for regulation. This proposal envisages a supranational body which would register MNCs and give them an international legal personality-"cosmocorps" according to the terminology of George Ball-and would apply such rules for the regulation of competition and guarantees against uncompensated expropriation as were agreed upon. The proposal is in effect intended to protect MNCs against the intervention of nation-states as a counterpart to the establishment of international regulation.

This proposal need only be noted in passing, for it lies clearly beyond the bounds of political feasibility. Given the present nature and authority of international organizations, the proposal must be accounted at best as utopian, at worst as a confidence trick which would remove MNCs very substantially from the only jurisdictions able effectively to control them, i.e., national jurisdictions with all the means of enforcement at their disposal, in order to allow them greater freedom under a facade of ineffectual international regulation. This suggestion for international regulation is mainly of interest as a manifestation of the ideology of transnationalism.

A possibly greater degree of feasibility attaches to suggestions for a general agreement on foreign investments analogous to the General Agreement on Tariffs and Trade (GATT) in the realm of commercial policy. Under this approach, states would remain the effective jurisdiction and enforcement agencies but would agree upon certain common principles of national action in such matters as taxation, regulation of competition, foreign exchange and export controls, expropriation conditions, etc. The general agreement might be supplemented by the setting up of an agency able to initiate investigation of related issues and to make recommendations which might become the basis for an extension of the scope of the agreement. Such a general agreement could be described as a code applicable to MNCs, and the notion of a "code of conduct" has also been suggested in looser forms and with less explicit machinery for accountability and enforcement.

The main proponents of the GATT-type approach to regulating the MNC have not usually given prominence to labor matters, although some labor organizations including the International Confederation of Free Trade Unions have advocated a "code of conduct" for MNCs in the labor field. The ILO has already begun-rather inconclusively-to discuss the notion of such a code of conduct.10 One obvious approach would be to include within a general agreement on investment certain of the more important existing ILO standards, such as those dealing with trade union rights and collective bargaining and certain basic conditions of work and safety provisions. (This idea encounters the objection that in some countries these norms would then apply to MNCs but not to national enterprises.)

This approach, like the foregoing, originates in a benign view of the potential role of the MNC in the global economy. Were any such agreement to be concluded, it would be most unlikely to be universal in scope but limited only to countries whose governments share such a view. Similarly, it would appeal mainly to those segments of the labor movements that opt for the transnational strategy. As with the international regulation proposal, the proponents of the general agreement have in mind to create certain guarantees for foreign investment as a counterpart to regulation, and thereby to provide a more predictable environment for the operations of MNCs. The general agreement approach does not respond so well to the desires of governments or of trade unions that see MNCs as a threat to their own control of the instruments essential to pursuing a welfare policy. Such governments would be disinclined to enter into international obligations that would restrict their means of control over foreign investors and the jobs they may create or withdraw. It is indicative that the Canadian government, which once favored the general agreement approach, has now moved away from it.

A further objection to the general agreement or code of conduct approach in the labor field is that it would apply only to workers employed directly by MNCs. The impact of the internationalizing of production on the welfare of people outside the MNC sector is a critical issue, with which the codes approach in no way comes to grip.

Any significant advance toward worker participation in management, advocated with growing vigor by part of the European Left, could alter the current balance between transnational and national strategies on the part of labor. This development could cut either way, depending upon the real nature of worker control. For many who advocate it, worker control in industry has become the current revolutionary myth heralding a transformation of the structure of power in society. Insofar as this vision approximates future reality, worker control, by ensuring that power remains on the shop floor, would crumble the centralized control structures of MNCs. The historical reality of worker participation in management has, however, been anything but revolutionary. Codetermination has co-opted worker elites into the social partnership. Union representation on the boards of management of MNCs, which has been advocated by some exponents of the transnational strategy, could well prove to be a step toward corporatist symbiosis in labor-management relations-a step which would confirm the neglect of and unconcern for the broader welfare issues which have characterized the process of internationalizing production.

An information and reporting approach to regulating MNCs seems likely to be widely adopted. The United Nations has lent its authority to this approach, which recognizes that national governments have the major responsibility for regulating MNCs, but frequently lack the information to make their attempts at regulation effective. The international aspects of this approach would identify the kinds of information governments should require MNCs to disclose, and would also provide expert assistance to governments which require it in order to set up the machinery to collect and use this information. Trade unions will support this approach since, even more than governments, they are aware that lack of information puts them at a disadvantage vis-à-vis MNCs.

The pattern of regulation most likely to emerge as dominant will come via a complex process of intergovernmental bargaining over the application by home and host countries of national controls and requirements. Looking backward, some countries like Japan took a highly restrictive attitude toward foreign investment, while other countries like Canada and many less-developed countries imposed few restrictions. Recently, the distance between these polar types has greatly diminished. Japan-and even the Soviet Union-admit MNC operations more readily but on their own conditions. Canada and less-developed countries increasingly require that foreign investors bring some specific benefit-in the form of jobs for nationals, new technology or investment, or an increase in exports-and that they conform to national industrial policies. Home countries are likewise under pressure to regulate MNCs from a variety of motives, e.g., to prevent the export of jobs, to curb an outflow of capital, to protect technological advantages in some fields, and to prevent shifts in the sourcing of exports entering world trade that could have long-term adverse balance-of-payments effects. The restrictions that both home and host countries now seek to apply to MNCs are more frequently coming into conflict with each other.11 It is thus likely that governments of home and host countries will increasingly be negotiating with each other over what specific MNCs can do and the conditions under which they should do it. The issues at stake are not susceptible to generalization into norms or principles; they are questions of more or less. The resulting complex of regulations will be messier, more detailed, and probably more effectively administered than any generalized code of conduct. It will also be much less favorable to the MNCs.

From the perspective of labor, two main points must be noted. The first is that labor is very much concerned with these issues since they directly affect jobs. Organized labor will thus be prominent as a pressure group seeking to influence the outcomes both of national scrutiny and regulation of foreign investment and of intergovernmental negotiations about such regulation. The second point is that trade union action will take place within the national strategy. And in this process different national trade union strategies will frequently come into collision.

Canadian workers, for instance, have an interest in encouraging the establishment of a tire factory providing jobs in Canada, a factory designed to supply the North American market. Canadian workers would thus support a government offer of incentives to the foreign investors interested in establishing this factory in an area of Canada where unemployment is relatively high. U.S. organized rubber workers, on the other hand, see this Canadian action as potentially depriving their members of jobs, and petition their government to impose some restriction on the import of tires from Canada. Such cases will become increasingly common.


The question remains: Even if organized labor, using the national strategy, is able to bring pressure on individual governments to improve national and international regulation of the multinational corporation, will this deal with the potential for social conflict inherent in the emerging class structure?

From the above, it seems clear that organized labor has not been able and seems unlikely to be able to deal equitably with the whole range of social issues raised by the changes in a world economy impelled forward by the expansion of MNCs. The transnational strategy-perhaps the most striking form of labor response-is in many ways the least equitable. It deals only with the employees of the MNCs themselves, and in practice only with the most favored of these. The transnational strategy offers little hope, for example, to the workers in "export platforms," whose governments frequently guarantee the conditions of low wages and freedom from strike actions which are so attractive to foreign investors. This union strategy would only increase the privileged position of a minority of workers.

The national strategy can have a broader social impact, but the danger is that where organized labor reflects primarily the interests of primary labor market workers, the class of social marginals will be neglected-and it is precisely this class whose claims rank highest by the criterion of social equity. At present, there is no sign of a response to the MNCs which would come effectively to grips with the condition of the social marginals. Yet economic trends continue to make this group increasingly numerous and increasingly vulnerable.

The extent to which social equity is an effective guide to policy is very much a matter of political structures, and the consequences of trends analyzed here are clear in their implications for political structures. Successful pursuit of the national strategy by strong trade union organizations in industrialized countries could lead toward a form of corporate state in which unions would exert a continuing influence along with business upon government intervention in the economy and upon foreign economic policy. The corporate state would provide the powerfully organized interests with protection and security, leaving the social marginals to the discretionary generosity of state welfare. In less-developed countries, the political consequence of growing marginality has more frequently been a less sophisticated form of coercive authoritarianism.

These political structures are not solutions to the problems posed but rather expedients to contain the conflicts inherent in the emerging class structure. In the broadest terms, we are moving from a period in which economic resources have by and large been sufficient to moderate social tensions, toward one in which political resources are being used to compensate for the growing inadequacy of economic resources. In retrospect, economic growth appears to have been the principal factor which allowed industrial conflict to become institutionalized and which diminished its intensity. Unions could dispute with employers over the division of increments to growth without attacking either the basic distribution of wealth or the structures for reproducing wealth. In consequence, established workers were able to improve their conditions progressively. The cult of growth-unquestioned as recently as the early 1960s-has now been displaced by an awareness that human survival requires some restraint in the rates of depletion of natural resources, of increases in population, and of the polluting effects of production. Superimposed upon this new perception of the finite character of the global ecosystem now comes a recession, bringing about a de facto decline in growth. Without actually embracing zero-growth as a policy for a world which has so much poverty to relieve, it does seem necessary to abandon the mental schema of the 1950s and 1960s in which all problems seemed to be resolvable or postponable through growth, with differential payoffs to the contending parties in proportion to their relative strength.

The new low-growth schema sees social classes as well as nations in an ongoing confrontation of a kind that Helmut Schmidt aptly described as the "struggle for the world product."12 The form of the struggle is political though its object is economic. Power and bargaining strength now consciously replace the classical concept of the market as the way in which distribution is determined. The issues now have to be faced in terms of sharing and redistribution among social classes as well as among nations, no longer in terms of the division of increments. The issues thus become more intractable, more conflictual, and they place a very heavy, perhaps too heavy, strain upon national and international institutions which were devised upon the assumption of continuing growth.

Within this prospect of rising conflict and institutional stress, established labor and its union leaders are in a position to influence future directions in a crucial manner. They can acquiesce in the movement toward corporate states and coercive authoritarian regimes, or they can resist these tendencies. Some elements of self-regarding interest counsel acquiescence. It would be illusory to pretend the contrary. But established workers and at least some of their union leaders still recall the historic moral appeal to a worker solidarity in which the more powerfully organized demonstrate their responsibility to defend the weaker as well as themselves.

Thus, established labor confronts the critical ethical option: symbiosis or solidarity, either a corporatism with its coercive accompaniment or the pursuit of a broader and more egalitarian welfare at the sacrifice, for some more advantaged groups, of material gains they might have had. And if labor exercises the option for solidarity, the multinational corporation need appear neither as hero nor as villain. Rather, it would appear as an objective force in the movement of social history: both a generator of the class structure and a catalyst of labor's consciousness, provoking decisions on the future alignment of the classes into which labor has become divided.


1 Several of the books which have dealt with this aspect are the products of symposia. The first in the field was Hans Günter (ed.), Transnational Industrial Relations, London: Macmillan, 1972. A more recent one is Robert J. Flanagan and Arnold R. Weber (eds.), Bargaining Without Borders: The Multinational Corporation and International Labor Relations, Chicago and London: University of Chicago Press, 1974. A recent analysis from a European trade union perspective is Ernst Piehl, Multinationale Konzerne und internationale Gewerkschaftsbewegung, Frankfurt-am-Main: Europa Verlags-Anst., 1974.

2 See for example Osvaldo Sunkel, "Big Business and 'Dependencia': A Latin American View," Foreign Affairs, April 1972.

3 These figures are derived from a table presented by Professor E. M. Kassalow in an unpublished manuscript on the International Metalworkers Federation. Professor Kassalow bears no responsibility for my use of his figures.

5 These concepts have been used comparatively in Peter B. Doeringer, "Low Pay, Labor Market Dualism, and Industrial Relations Systems," (unpublished) Discussion Paper No. 271, Harvard Institute of Economic Research, Harvard University, January 1973.

7 A brilliant analysis of the institutionalizing of conflict is given in Ralf Dahrendorf, Class and Class Conflict in Industrial Society, Stanford: Stanford University Press, 1959.

8 See for example, Peter P. Gabriel, "The Multinational Corporation in the World Economy: Problems and Prospects," in Flanagan and Weber, op. cit.

10 Multinational Enterprises and Social Policy, Geneva: ILO, 1973.

11 The point is discussed in C. Fred Bergsten, "Coming Investment Wars?", Foreign Affairs, April 1974.

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