- Created: Wednesday, 23 September 2009 14:30
- Written by Thomas Vincent
Multinational corporations are the main means by which imperialism seeks to divide the world according to economic power. With vast concentrations of wealth they dominate world trade, investment and the living conditions of entire populations.
Posters around Britain display the mysterious slogan;‘GE – Imagination at Work’, alongside young, smiling faces. But what is GE, and what does it do?
With annual revenues of over $152.8 billion in 2004 (slightly larger than the gross domestic product of Argentina), the US-based General Electric company is the world’s largest multinational corporation. It employs over 300,000 people in 160 countries. GE’s operations range from high-tech materials to commercial finance, energy production to household appliances, bio-sciences to construction, transport to the media. The media giant NBC Universal and the Hotpoint brand are just two of its relatively smaller businesses. Over half of GE’s revenues are gained from financial services, demonstrating the parasitic nature of imperialism; other substantial revenues are gained from the arms trade and producing nuclear power plants, expressing imperialism’s militarism.
In the 1980s and 1990s former head of GE, Jack Welch sacked 112,000 people in his first four years in the job. He was called ‘Neutron Jack’, for eliminating people whilst leaving buildings intact. Recently GE has profited from contracts in occupied Afghanistan and Iraq, including energy provision and helicopter engines which have powered 70% of US military flights over Iraq. GE has also cashed in on clearance and reconstruction contracts in New Orleans following Hurricane Katrina. Although GE has recently expanded investment in more ‘ethical’ areas, wind and solar energy and hybrid engines, Chief Executive Jeffrey Immelt is clear about the cynical profit motive behind this: ‘“green’’ is green’ – an environmentalist image means big bucks.
‘A monopoly, once it is formed and controls thousands of millions, inevitably penetrates into every sphere of public life, regardless of the form of government and all other “details”.’ (VI Lenin, Imperialism, the Highest Stage of Capitalism, 1916)
For seven successive years GE topped the Financial Times’ poll of the world’s most respected companies, conducted among Chief Executives in 25 countries. GE’s history reveals the ruthlessness and corruption which commands such admiration from the bosses of monopoly capitalism. For decades GE carried out experiments on the effects of radiation involving whole working class communities, prisoners, hospital patients and the elderly. In the 1990s GE sacked the ‘lowest performing’ 10% of the workforce every year: an ‘aggressive approach to flexibility’. In 1992 GE pleaded guilty to involvement in fraudulently channeling money from the Pentagon to the Israeli military, just one example of a level of corruption which in the 1990s forced the Pentagon’s Defence Contract Management Agency to set up a special office specifically to investigate GE. A 2002 study of the US government’s top 43 contractors ranked GE top of the list of ‘repeat offenders’ since 1990, with environmental violations, fraud, work place safety violations and employment discrimination. More recently the company has been forced to ‘restate’ its financial reports for 2001-2004 due to inaccuracies and undeclared revenues that it claims were due to its ‘hedge accounting’. This constant shifting of money around the world is in an attempt to avoid increasingly unstable local conditions and maximise profits without making a thing: the pinnacle of parasitic capitalism’s achievements.
In 1998 the United Nations ranked GE as the world’s most transnational company in terms of foreign direct investment, and in 2004 GE’s revenues from the underdeveloped nations reached $21 billion, up 37% from 2003. Chief Executive Immelt announced that he expects 60% of future revenue growth to come from ‘emerging markets including China, Russia, Eastern Europe, India and the Middle East’. GE explains how these revenues will be gathered: ‘We will deliver vital systems for water, power, healthcare and transportation.’ GE wants to restart work on the Dabhol power plant in India, having purchased Enron’s 65% share jointly with Bechtel in 2004. Before work on the plant was halted in 2001, when GE already had a 10% share, Amnesty International and Human Rights Watch alleged that brutal police repression was used against local people opposed to its construction, with complicity from the companies involved. Through the forced privatisation of the basic necessities of life abroad GE will try to expand its profits, which in 2004 amounted to $16.6 billion.
Crucial to GE’s monopoly power is its fusion of financial and productive capital, with banks in 19 countries and GE Commercial Finance funding capital expansion in ‘healthcare, manufacturing, fleet management, communications, construction, energy, aviation, infrastructure and equipment, as well as many others’, and owning assets of $219 billion. Through such investments GE exerts control over capital officially outside the company. Lenin described this as ‘finance capital’, and cited GE (then called AGE) as a classic example of a monopolist company holding dominant shares in other companies. In May 2005 GE acquired a 49.9% stake in one of Central America’s largest banks, BAC International Inc, proudly announcing a ‘foothold’ in the region. The recently renamed outsourcing company Genpact in which GE maintains a dominant 40% share, illustrates the way that finance capital behaves. According to Genpact’s Chief Executive Pramod Bhasin, ‘It’s our job to tap into the intellectual capacity of a country...If we need engineering skills and they are available in Romania, that is where we go.’
The readiness with which GE moves capital around the world may give the impression that GE is a truly transnational company. Yet while just under 50% of the total workforce and 47% of revenues come from outside the US, all but one of GE’s board of directors live in the US; the single exception lives in Britain. Between them these directors also sit on the boards of Microsoft, Kimberley-Clark, Procter and Gamble, the Kellogg Company, General Motors, ChevronTexaco, Coca-Cola, Dell, Anheuser-Busch, Motorola, Bechtel etc. They help run Harvard and Oxford universities and the US Nuclear Threat Initiative. Two US banks, JP Morgan Chase and Citibank, hold dominant shares in GE. The former head of JP Morgan Chase sits on the board of GE. GE maintains ‘strategic alliances’ with other US companies, including Dow Jones, publishers of the Wall Street Journal, and Microsoft, with whom it jointly runs MSNBC media corporation. Through such networks the US ruling class is held together and acts not on the basis of companies, but as a national ruling class. This concentration of ownership of finance capital in imperialist countries, and the consequent ruling class alliances, exposes the falsity of the idea that the power of ‘transnational companies’ has made nations obsolete as the primary grouping for the governance of capitalism. Rather, it is that multinational companies are being used as vehicles for the division and redivision of the world amongst national ruling classes, each competing for a bigger share of the plunder. Far from making national ruling classes obsolete, the incessant corporate mergers and takeovers of globalisation increase their power and relevance.
FRFI 188 December 2005 / January 2006