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Volume 23, Number 2March/April 1972

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The Corporation As Peacemonger

To the new international corporations any national act… which threatens freedom of trade and communication… is as welcome as a kick in the head.

Written by David W. Ewing
Illustrated by Don Thompson

Ever since Dwight Eisenhower issued his famous warning about America's "military-industrial complex" it has been open season on the corporation. Moved by dark suspicions that Capitalism and Militarism are inextricably linked, folk singers, paper-back authors, rioting students and groups such as California's Another Mother for Peace have given new life to the Marxist conviction that capitalism cannot survive without war to stimulate production.

It would be naive to deny that major corporations—Krupp and Mitsubishi come most readily to mind—have had key roles in militaristic ventures, or suggest that it can't happen here or again. But it would be obstinate to insist that corporate boardrooms in 1972 have not changed since the dark days of the 1930's. In fact, for many reasons and in several positive ways, the corporation is rapidly becoming an influential force for peace. Indeed if one were to generalize about the corporation in 1972 it would be more aptly characterized as a "peacemonger" rather than warmonger.

No doubt that is a startling concept. But consider: if nationalism is a major cause of war, as historians agree, then doesn't it follow that any force or organization which reduces nationalism contributes to peace? And if that's true, what is more "trans-national" or truly "inter-national" than today's multinational corporations?

The concept of "trans-national" organizations is certainly not new. For years the Catholic Church, the International Red Cross, and trans-national agencies such as the World Court, the United Nations Food and Agricultural Organizations and UNICEF have functioned in a non-nationalist environment, with loyalties and interests far exceeding national frontiers. But in terms of independence, finances, freedom, discipline, and impact, none of those organizations compares with the multinational corporation.

A good example of the multinational corporation is Unilever. Although legally an Anglo-Dutch company, Unilever operates in nearly 60 countries and maintains research centers in 33 countries. The head offices in London and Rotterdam are staffed with managers from 10 European countries as well as from Australia, Canada, Africa, and India. So international is the managerial function that in Ghana one of the managers is a citizen of Ceylon, and in the Solomon Islands the management team includes a manager from Ghana.

Not even Unilever Chairman E.G. Woodroofe would say management posts in all the countries where Unilever manufactures and sells are equally open to the citizens of all of those nations. But the company is well on its way to that goal. Since 1950, non-Europeans and non-North Americans have come to dominate operations in developing countries and are reaching managerial levels in even the most advanced nations.

An organization does not threaten nationalism today without giving something in return. Unilever gives access to worldwide technological knowledge and know-how provided by research or development laboratories in 33 other countries. An enzyme recently developed in a Unilever lab in the Netherlands, for example, may solve a special problem in Africa. Details of the unplasticized polyvinylchloride pioneered in Germany are readily available to Japanese researchers because Unilever operates a lab in Japan. The vegetable oil processing technique learned in India can be procured by Americans working in the company's U.S. laboratories. To the less advanced—and often most nationalistic—nations, such know-how may be extremely valuable.

A number of U.S. companies are going in the same direction as Unilever. For instance, the director of Ohio-based Eaton Yale & Towne's European truck component operations was educated in Italy, is a native of Austria, is a citizen of Argentina and speaks nine languages. He managed operations in both Argentina and Great Britain before assuming his present duties on the Continent. Men with such backgrounds are becoming more common as the company expands its operations in 22 countries.

The point is this: what interest can such a company have in furthering any nation's militaristic ambitions? Its managers belong to the world community, not national communities. Unlike the subject of Edward Everett Hale's famous story, The Man Without a Country, they have not lost their national citizenship through renunciation and been exiled to international waters. But like him, they truly are "men without a country" in the sense that they are not beholden to one nation and do not owe allegiance to one government. In fact, nationalists themselves complain because multinational companies like Unilever do not hold themselves accountable to any one political authority or alliance of powers.

Perhaps more importantly, the multinational companies have established such complex, interdependent networks of supply and demand that military aggression can only harm their operations. Consider Eaton Yale & Towne's Automotive and Controls Group. It must depend as much on contributions from factories in Italy, Brazil and Canada as it does on the output from facilities in Foxboro, Massachusetts, or Saginaw, Michigan. Any national act, military or otherwise, which threatens freedom of trade and communication between such centers is as welcome as a kick in the head.

Banks too are crossing national boundaries. Since 1964, according to a study by Michael von Clemm, most major banks of the West, Japan and Australia have formed teams which, more likely than not, involve institutions from other nations—often nations that are not particularly friendly in the political sense. The "consortium banks," as the combinations are called, thus blend multinational allegiances. Atlantic International Bank Ltd., for example, is a consortium formed by leading banks from Italy, England, France, the Netherlands, and the United States; European American Banking Corp., another consortium, is the creation of Dutch, German, Belgian and English banks; and World Banking Corporation is a consortium produced by banks in Scandinavia, North America and West Central Europe. It will not be long, von Clemm predicts, before banks from Brazil, Mexico, Kuwait and Yugoslavia join the consortium movement.

Inevitably, such international alliances lead the personnel involved to take a dim view of militarism. Creative relationships between nations become more important to a consortium's management than the individual nations themselves.

I recall a revealing comment made earlier this year by David Rockefeller, chairman of the Chase Manhattan Bank, which belongs to a consortium. Chase, he said, infuriated the Arabs by functioning as a trustee of the Israeli bond issue, yet, in 1970, also provoked Israeli wrath by urging President Nixon to improve its relations with the Arab world and by maintaining financial ties with Arab countries. "In international banking," Rockefeller said resignedly, "you often get involved this way."

Other business organizations that have a high stake in peace are international investment companies like the Private Investment Company for Asia. PICA, which finances such projects in Asia as a $6-million Malaysian textile mill and a $4-million Philippine tile plant, was started in 1969 with a third of its capital provided by 28 U.S. companies, another third by 56 Japanese companies, and the final third by 28 companies in Australia, Canada, and Europe. Its management roster reads like a Who's Who of international business. Its chairman is Yoshizane Iwasa, head of the Fuji Bank, Ltd., in Japan. Its vice-chairmen are two leading executives from Switzerland and Great Britain. Its president is Dr. Willem A. van Ravesteijn, former managing director of the Industrial and Mining Development Bank of Iran. The manager of investments is a Frenchman, the executive in charge of investment appraisal is an American.

To the average newspaper reader, PICA's plans for war-torn Southeast Asia may sound incredible, but if the annual report is to be believed PICA is investing in Cambodian tourism, a proposed rubber exchange in Bangkok, a massive logging venture backed by six companies from Singapore and Indonesia, regional payment unions and a hotel development in Bali—each and every one of them tied at least in part to the prospects of peace. Not even Senator Fulbright could wish more devoutly for an end to the Vietnam War than PICA's pragmatic, multinational staff.

Corporate peacemongering is also carried on by the branch plant or subsidiary overseas. Once associated with "dollar imperialism" and the U.S. Marine Corps (especially in Latin America), such firms today—whether American, European or Japanese—expose such a "low profile" that the average American is unaware that Unilever, Shell, Nestle's, Massey-Ferguson, and other businesses are owned by foreign capital. (Just as the Englishman may be surprised to learn that H. J. Heinz is a U.S. corporation.) Although the cynic may see this as evidence of concealment of a foreign power's design, the fact is that the modern subsidiary overseas does lose its identity as an outsider and may even produce important changes in the host body.

A case in point is a Sicilian refinery of Esso Standard Italiana, an affiliate of Standard Oil Company (New Jersey). Some 97 percent of the refinery's employees are Sicilian, so the foreign presence is not conspicuous. By introducing a common U.S. personnel policy, however, the refinery has had a beneficial sociological effect on Italy. In the words of Dr. Vincenzo Cazzaniga, president of the Italian affiliate: "Our practice of constantly moving personnel—bringing Sicilians to work at our headquarters in Rome and at our refineries on the mainland, and sending Italians from the north to work in Sicily—is making the beginnings of an integration that Italy and Sicily have lacked for much too long."

What is more, engineers and technicians at the refinery often go, for periods of six months to a year, to other countries for training. Half a dozen are sent annually to refineries of the U.S. company's affiliates in England, the Netherlands, Canada and Venezuela. Others get special assignments in the United States.

The effect of this corporate graft onto the Sicilian body, therefore, has been not only to attack the regionalism that often produced internecine conflict in Italy, but also to internationalize the viewpoints of many Sicilians. Multiply this effect by the many hundreds of times it occurs regularly in other branch plants and subsidiaries of Western corporations around the world; take into account the chain reaction produced sometimes in the form of intermarriage of different nationals, the education of children abroad and so forth; and you have a small but significant leak in the dikes of nationalism.

At least one international corporation feels so strongly about the value of cultural interchange that it promotes the process as part of its public relations program. Since 1962 Volkswagen has paid most of the costs of a series of Youth Exchanges involving more than 500 German and American young people who have swapped homes and families during the summer. American VW dealers pay the Americans' way and distributors pay the Germans' way. The purpose, as one VW representative puts it, has to do with the fact that German-American misunderstanding contributed to the outbreak of World War II. "What we want the VW program to do," he says, "is help, in a small way, to avert any future misunderstanding which might lead to shooting."

Corporate "do-gooder" programs also contribute to peacemongering, especially when employees are doing it out of personal interest.

Working sometimes on company time with budgeted funds, sometimes with "bootlegged" funds, and sometimes after hours on their own time, many employees have operated like unofficial peace corpsmen. Indeed, they were doing such work long before Sargent Shriver's U.S. Peace Corps came on the scene, and they were able to show some of the newcomers how to operate.

I have talked with a number of U.S. businessmen who have participated at one time or another in these corporate-style peace corps activities. Sometimes they remembered such activities better than the primary tasks they were paid to do. Why did they do them? The answers were typically delivered with a shrug of the shoulders. Because they wanted to help, or "the need was there," or it made them "feel better." One businessman answered, "It always worries me to see extremes of wealth and poverty, with nothing in between." I think he identified the concern that countless others have felt in developing areas. To the capitalist, an economy without a strong middle class looks like a tinder box.

This may explain why corporate peace corpsmen don't seem bothered when their projects carry them far afield from the company's primary business mission. A classic example is the Firestone Tire & Rubber Company, which went into Liberia years ago to develop rubber plantations and before long found itself in the poultry business too. When the Liberians became interested, Firestone showed them how to start chicken farms—and today the industry is a thriving one in that country. The company itself has phased out of the business because it doesn't believe in competing with local industry.

Firestone researchers also set up Liberia's first cattle-breeding program and a botanical experimentation program that led to the introduction of new varieties of tropical fruits and plants. Another group of employees published the first grammar ever written of a leading native language called Kpelle.

In Saudi Arabia, the staff of Arabian American Oil Company (Aramco) began, late in the 1950's, the first major survey of pests that might harm existing agricultural crops or crops that might later be introduced. The company's concern was that chemical control projects might upset the traditional relationships of crops, insects and animals, changing once harmless insects and mites into uncontrollable ones. Later, agriculturists of Aramco showed farmers in al-Hasa, the country's largest oasis, how to switch to a wide range of vegetables and grains. Another group of staff experts has helped the government to adopt dune-control techniques developed in Libya.

Education has long been a favorite subject of corporate peace corpsmen. In Venezuela, numerous employees of Creole Petroleum Corporation, an affiliate of Jersey Standard, go regularly into the barrios of Caracas and nearby towns to teach underprivileged school children. The children attend a system of schools founded by a famous Jesuit, and the Creole Foundation has donated more than $300,000 to the system. In Colombia, employees of another Jersey Standard affiliate, International Petroleum Limited, teamed up with villagers of Pasacaballos, a poverty-ridden fishing town, to build and furnish two public schools and a medical clinic.

One of the most frequently cited examples of public school construction is in Saudi Arabia. There Aramco has built and maintained 44 schools in the Eastern Province of the kingdom; eight more were built in Saudi Arabia by the Trans-Arabian Pipe Line Company and all were turned over to the public school system as soon as they were completed.

For years U.S. food companies have been working on products to solve malnutrition in South America. Because the product must be nutritious and inexpensive, yet also delicious (as judged by local people), there is little hope that these products will be profitable in the foreseeable future. Yet in Brazil Coca Cola is test marketing a noncarbonated soft drink with high-protein ingredients, and General Foods Corporation is offering a low-priced macaroni containing as much nutritive value per pound as steak. In Colombia the Quaker Oats Company, after years of losses, has developed a high-protein grain beverage mix called Incarparina, which costs about one-half cent per serving.

The most ambitious private peace corps in operation today is ACCION, a non-profit organization supported by corporations and volunteers from business. ACCION sends teams of workers into the slums of Peru, Brazil, Venezuela and Colombia to teach residents how to construct buildings, roads, sanitation systems and other facilities; and teams also show poor people how to organize cooperatives, small businesses and training programs.

When ACCION started, in 1961, most of its support came from such giant U.S. corporations as IBM, Otis Elevator, and the larger oil companies. Now numerous South American companies have joined in and in ten years the staff has grown from 40 to more than 1,000 and the number of corporate contributors from 24 to about 3,000. Nearly 100 Latin American businessmen serve as directors, along with scores of U.S. executives. Wherever it goes, ACCION seeks to develop self-supporting organizations and groups. It begins with the natural leaders in a community and focuses on small projects that the people want done. Later the leaders go off to form their own action groups, and ultimately (as in Venezuela) a nationwide organization directing hundreds of projects at a time may go into operation.

Peace corpsmen corporate-style come forth even from the ranks of retired businessmen. In 1963 at the International Management Congress, David Rockefeller suggested a "managerial task force of free enterprise" to assist in developing economies. The next year the International Executive Service Corps was formally organized and began to recruit retired U.S. businessmen to go abroad at the request of foreign governments and help solve practical economic problems. The volunteers meet some 500 requests a year for assistance, and they have completed many hundreds of projects in 45 countries. Costs are paid by more than 200 U.S. corporations and the Agency for International Development.

Multinational corporations, foreign subsidiaries that blend into the local economy, and corporate peace corps projects in developing countries mark a new development in capitalism—what might be called "international capitalism," but in a very good sense. In this new stage the corporation is no longer nationalist in viewpoint and scope. It is tied to several countries, and its prospects for growth and profitability depend on peaceful relationships between countries. Trade barriers, internecine conflict, and especially militarism are its avowed enemies.

As Henry Ford II noted recently in a talk at Copenhagen, "the interweaving of Western Europe's economies since World War II has now made it unthinkable, for the first time in history, that any country in the West could make war on any other."

To generations of young and old alike who are sick and fearful of war, facts like these are extremely important. Peter Drucker expressed the feeling of many thoughtful observers when he wrote in The Public Interest that: "The multinational corporation ... is the one non-nationalist institution in a world shaken by nationalist delirium. It is not a political institution itself and must not be allowed to become one."

Of course, there is a debit side of the ledger. Some of the same U.S. companies that have been active in the ways described are also defense contractors, and thus exposed to the temptation of alliances with the Pentagon. There is also the danger of economic colonialism, simply because so many large companies, especially U.S. companies, are successful on a world scale. As Galeazzo Santini wrote in the Italian magazine, Successo, it will take more than the promise of peace and prosperity to make some people willing "to travel on a General Motors passport, to call at the Shell Consulate or the IBM Embassy ..."

Moreover, a world corporation's very desire for political stability makes it prone to become allied with governments in power, and if these governments are not popular (as has been the case sometimes in Latin America), the company may find itself in an awkward position.

Yet, for all of its weaknesses, international capitalism makes a fascinating contrast to international communism. International communism had a carefully conceived ideology and ardent ideologists; international capitalism has neither. International communism had a guiding organization (the Comintern); international capitalism does not even have a letterhead. International communism sought to make nations and their governments dependent on the Communist Party in the U.S.S.R.; international capitalism seeks to make nations dependent on each other. International communism preached violent overthrow of non- communist governments; international capitalism depends on stability of local governments—whether they are hostile ideologically makes no difference so long as they welcome trade.

Most important, international communism has yet to make it in any convincing way while international capitalism bids to be a resounding success.

David W. Ewing, an expert and occasional consultant on corporate management, is associate editor of the Harvard Business Review. He is also the author of three books, the editor of six, and contributes regularly to such publications as Harper's, The Lamp and Think.

This article appeared on pages 22-25 of the March/April 1972 print edition of Saudi Aramco World.


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