Book Author: Daniel B. Litvin
Book Review by : S S George
Director, ICMR (IBS Center for Management Research)
western style capitalism, multinational corporations, economic power, employment, goods and services, exploit natural resources, pay taxes, public opinion, government policies, Daniel Litvin, Resurgence
Empires of Profit deals with a topic that is especially relevant today
- the spread of western style capitalism across the world , and the responses it evokes in the developing, and to a lesser extent, in the developed, countries. The propagators of capitalism today are the multinational corporations; and some of them wield more economic power than many countries. More and more, multinational touch the lives of people around the world
- they provide employment, goods and services, exploit natural resources, pay taxes, and influence public opinion and government policies. Today, it would be difficult to find a country where multinationals do not operate.
Daniel Litwin appears to be well qualified to write a book on the impact of multinationals on societies. He has degrees in anthropology and development from the London School of Economics, and in philosophy, politics and economics from Oxford University. He has also served as a policy advisor to Rio Tinto plc
- a multinational that has often faced, and still faces, severe criticism for the impact of its activities on the developing world. Although he writes that the book has nothing to do with Rio Tinto, his stint with the company may well have spurred him on to take a closer look at multinationals and their impact on the societies in their host countries.
The book is structured chronologically, and is divided into four parts. The first part deals with the first wave of foreign investment in modern times in (what are now) poor countries, and describes the activities of two multinationals from the British Empire - The English East India Company and the British South Africa Company. The second part of the book talks about the South Manchurian Railway and the United Fruit Company - multinationals from a later period, and from two later imperial powers, America and Japan.
Part three deals with the backlash in the host countries to the multinationals and what had by then come to be perceived as commercial imperialism. This backlash was characterized by a reassertion of economic independence by countries which had recently won political independence from their colonial masters. The companies discussed in the section (Aramco in Saudi Arabia, an Italian firm in Iran, and a Belgian firm in Congo) faced setbacks in their host countries, but were quick to attempt to reenter the countries when the backlash petered out and the globalization process resumed with greater vigor. This is the subject of the fourth part of the book
"Resurgence", which discusses the tremendous increase foreign investment in poorer countries being witnessed now, and the countervailing pressures from the societies of these host countries and the home countries of the multinationals. In this phase, developing country governments which had so recently been vehemently opposed to foreign investment began to actively work to
attract foreign multinationals. There are several strands of thought running through the book; one such is the theme of the inadequacy of the structures, systems and policies of the multinationals, to deal with nuances and complexities of the societies they operate in. According to Litwin, whether or not multinationals are giants at whose feet
"creation trembles", they are also "inherently clumsy, partially sighted giants,
which often wield tools too blunt for the job at hand."
Lack of local knowledge and the consequent insensitivity to local culture and society were the greatest weaknesses of the organizations described in the book.