International Monopolies

Monopolies, International

 

the privately owned capitalist firms with foreign assets, or associations of firms of various national affiliations that have established their dominance in one or several spheres of the world capitalist economy with the aim of extracting maximum profits.

The highly socialized nature of capitalist production and the internationalization of economic life provide the economic basis for the rise and development of international monopolies. International monopolies consist of two categories: trusts and concerns of a single nationality that hold foreign assets, or transnational monopolies; and international monopolies per se. The latter category includes international firms that feature unified monopoly ownership, as well as combinations among firms such as cartels, syndicates, and monopoly groups that have either a production or a scientific and technological basis.

Transnational monopolies are national in terms of capital and control but international in their sphere of activity. Companies of this type existed as early as the 19th century but reached their greatest extent in the mid-20th century. A case in point is the American petroleum concern Standard Oil of New Jersey; in 1967 it had production facilities in 45 countries and its foreign holdings accounted for 56 percent of its total assets, 68 percent of total sales, and 52 percent of total profits. Similarly, by far the greater portion of the production capacity and marketing facilities of the Swiss food concern Nestlé is located in other countries; only some 2 to 3 percent of the firm’s total turnover during the late 1960’s occurred in Switzerland.

The growing importance of such companies within the world capitalist economy is attested by the swift increase in international production, measured by the sales volume of enterprises that are controlled by foreign capital. Since the early 1950’s this measure has increased annually by an average of 10 percent, approximately doubling the rate of overall production growth in the capitalist countries. In the early 1970’s this index of international production was estimated to be between $250 and $300 billion a year. Deducting the value of raw materials and unfinished products, this equals roughly 7 percent of the gross product of the entire capitalist world.

More than two-thirds of international output measured in this fashion is produced by American trusts and concerns and nearly one-third by Western European companies, particularly by British, Dutch, and Swiss firms. In 1968–69, out of 589 firms holding assets in ten or more countries, 268 were American and 321 Western European. Surpassed by their American rivals in aggregate volume of international output, Western European transnational companies still somewhat exceed them in number. This may be explained by the greater size of American monopolies. American monopolies are also exceeded by Western European trusts and concerns in their “internationality,” that is, by relative weight of foreign assets, production, sales, and profits. Japanese firms are practically absent among transnational companies, as exports continue to hold the main place in Japan’s foreign economic expansion. But since the early 1970’s there has been a noticeable tendency toward increased Japanese investment in American and Western European industry.

As distinct from transnational monopolies, ownership of international trusts and concerns originates in two or more different countries. Their major distinguishing features are international dispersal of capital stock and multinational composition of the firm’s management core. Examples of such monopolies are the British and Dutch food and chemical concern Unilever, the British and Dutch oil company Royal Dutch Shell, the West German and Belgian photochemical trust Agfa-Gevaert, the British and Italian rubber products concern Dunlop-Pirelli, and the Italian and French automotive firm Fiat-Citroen. But these remain relatively few, largely because mergers of capital originating in different countries present major complications, such as divergent legal structures, dual taxation, and the opposition posed by certain governments.

There are several basic ways of bringing capitalist firms together to form an international monopoly. Monopolies operating in different countries may establish a joint company, which takes the form of an independently existing trust. Alternately, a trust based in one country may acquire part of the controlling bloc of shares in a foreign monopoly; a direct, that is, a de jure merger of the assets from different countries can also take place. Quasi-mergers of companies of separate nationalities can also occur. These are achieved either by an exchange of shares between firms that maintain their separate legal status, by the reciprocal appointment of administrators, or through joint ownership of the shares of affiliated companies. Such a quasi-merger may also be intertwined with or supplemented by additional agreements.

Quasi-mergers are the most common form used for establishing an international trust or concern. By this means, firms of differing nationalities can coordinate their operations while not only avoiding dual taxation, but also preserving formal independence, existing corporate structure, special production and marketing features, distinctive trademarks, prior location of company headquarters, and the protection of the laws of their respective countries.

International cartel agreements represent the prior historical form of international monopolies, appearing as early as the 1860’s. Unlike the cartels of that time, international cartel agreements today are concluded primarily by the giant monopolies. Monopoly cartels of the “classical” type are now increasingly subsumed under a more complex network of monopoly formations, embracing such specialized spheres as production, scientific research, and management. Structural changes in world production and trade, as well as an increased desire on the part of the cartels to conceal their true power and methods of market manipulation, have brought about the emergence of these new forms of international monopoly agreements.

Such agreements may relate to exchange of patent rights and technological information, joint research on new product applications and new methods of combating competing products, shared utilization of high-cost equipment, and standardization of product types. The structural shifts in world trade produced by the scientific and technological revolution have led to a reduction in the relative importance of raw materials in world trade volume and to an increase in the importance of finished products, especially machinery and equipment. The “classical” cartel is poorly suited for the machinery and equipment markets, inasmuch as cartelization normally presupposes matched constant prices. In the struggle for purchasers, producers increasingly take the course of improving the design and manufacture of their products without altering prices. Such nonprice competition is not conducive to traditional regulation through the usual cartel techniques. International agreements among firms may embody particular elements of cartelization, but as a rule do not represent cartel agreements in the full sense of the term. International syndicates, as a variant on international cartels, have also taken on new features; their expanded functions now include not only marketing but also the technical servicing of the products being sold, especially machinery.

Within the world capitalist economy the bourgeois state has intensified its involvement in the struggle for a maximum share in the total amount of surplus value being appropriated by the international bourgeoisie. This invites international monopolies to make increasing use of the state apparatus of their own or foreign governments, and is reflected in the rise and development of a variety of forms of state-monopoly amalgamation.

Despite the growth in the economic power of international monopolies since World War II, they are no longer the unchallenged masters of the world capitalist market. Three vital elements of the contemporary period—the world socialist system, the international working-class movement, and the national liberation struggle—impose close limits on the supposed mastery of such monopolies. A sharp struggle is taking shape not only between present-day revolutionary forces and the international alliances formed by the monopolists, but also within the ranks of the monopolists themselves-between the monopolies and “outsider” firms, between producers and consumers of the same commodity, and among monopolies in various economic sectors.

In conditions of rapid advance in science and technology, the uneven development of particular branches of industry and commerce controlled by international monopoly combinations in specific countries becomes aggravated and competitive mobility increases sharply. As a result, the problem of world economic redistribution is being posed more urgently than ever before. Such redistribution represents a test of strength among the monopolies, and prior international agreements among monopo-lists are often violated, causing the struggle to emerge into the open. This form of world economic redistribution is incapable of blunting or smoothing over the contradictions within imperialism, tending instead to intensify and deepen them still further.

REFERENCES

Politicheskaia ekonomiia sovremennogo monopolisticheskogo kapitalizma, vol. 2. Moscow, 1970.
Belous, T. la. Mezhdunarodnye promyshlennye monopolii. Moscow, 1972.
Union of International Associations. Yearbook of International Organizations, 12th ed. Brussels, 1968–69. (Pages 1203–14.)
Tugendhat, Christopher. The Multinationals. London, 1971.

T. IA. BELOUS

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