International Economics and the Growing Dominance of Multinational Corporations: Explaining the Disconnect and Finding a New Approach for International Economics

Symbolic violence

Culture is not merely a reflection of a dominant paradigm, it also tends to actively protect that paradigm from rivals that seek a paradigm shift. Bourdieu (1986, 1989b) explains that culture has staying power because it exploits people’s inherent desire to maintain acceptance within the group. People tend to consciously or unconsciously interpret reality in ways that often effectively leads them to act against their own individual interests because they also value social approval, friendship, and a role in their society and field. Recall that the evolutionary role of culture was, at least in part, to enable individual behavior that benefits cohesion of the whole group, not necessarily the welfare of each individual. Culture can be oppressive.

In much of his research, Bourdieu (1986, 1989) focused on cultural oppression. One of his themes was that such oppression was driven by an unequal distribution of cultural capital. Bourdieu’s uses the word capital here to emphasize that a person’s familiarity with, and ease of acting within, a culture is accumulated through the long, slow processes of social experience, family upbringing, assimilation, and formal learning. Bourdieu described various forms of cultural capital. For example, inherited cultural capital includes learned behaviors such as knowledge, habits, language and dialect, social mannerisms, and conversational manners. Economists definitely acquire a distinctive jargon and knowledge. There is also objectified cultural capital, which includes real physical things such as a musical instrument, a carpenter’s tool box, or, in the case of economists, an office computer and shelves of books and professional journals. In each case, the musician, the carpenter, and the economists would lose status if they did not posses such objectified capital. Note that the size of the collection of professional journals clearly reflects an economist’s tenure in the profession. Finally, institutionalized cultural capital includes diplomas, awards, certifications, and other official credentials, whose accumulation also takes a lengthy effort. Together, these forms of cultural capital give those who possess more cultural capital power over those who possess less.

The use of this power to impose one’s will over another person with less cultural capital is referred to by Bourdieu (1977b, 1986, 1989, 2001) as symbolic violence. Discrimination and harassment are overt forms of symbolic violence. But there are also many subtle forms of symbolic violence, such as a frown or look of disapproval by a parent that makes a child change its behavior or the concerned mention of “unfinished work” by a boss that effectively signals to an employee that (s)he had better put in some extra hours over the weekend. Symbolic violence among adults is fundamental to the perpetuation of gender, ethnic, and age inequalities. Bourdieu (2001) shows that symbolic violence often leads people to accept what are, objectively viewed, injustices because they adjust their doxa to match the social field they inhabit. He documents how working class children often accept the social order as legitimate and thus view the educational success of their upper- and middle-class peers as a reflection of the latter’s greater ability or harder work rather than the social privilege that enabled them to acquire the mannerisms, accent, and clothing associated with the habitus of a higher class.

Economics graduates of lower-rated universities, say the University of Nebraska, see the professional success of the graduates of higher-ranked universities, such as Harvard, MIT, or UC Berkeley, as a legitimate reflection of the latter’s greater ability or their harder work, even though in reality the institutionalized cultural capital (the diplomas) are seldom more than the result of class-based inherited cultural and economic capital. Economic pressures, such as the need for income or an employer’s health insurance, often lead a worker to accept the underlying doxa of hierarchy and the acceptance of the existing distribution of economic and cultural capital that justifies the unequal economic outcomes. So economics PhDs from Nebraska accept one-year instructor contracts at lower level universities while the Harvard graduates get the tenure track positions at the higher ranked universities. According to Bourdieu (2001), people are complicit in the symbolic violence they experience because they subconsciously adjust their doxa in order to maintain their sense of dignity within what they are forced to accept as the immutable reality of the social or professional field they inhabit. The resignation to the existing social order is due, according to Bourdieu, to the fact that redistributing cultural capital in order to reduce symbolic violence is likely to be a gradual, difficult, and slow process, and those who have the most cultural capital are likely to use it to resist redistributive measures.

But within the strong culture of economics, few economists will question their neoclassical models much less their neoliberal doxa. They received strong and continuous approval for mastering neoclassical economics from their professors during graduate school, and after graduation they continue to receive implicit reassurance of the legitimacy of the doxa and habitus from colleagues, journal editors, and employers. As an illustration of the subtle nature of symbolic violence, consider, say, a Marxist economist in line for promotion and in need of increasing her publication record to justify the promotion; she might very well convince herself that it is permissible for a Marxist to write an article based on a standard neoclassical model that reflects an idealized capitalist economic structure because such an article would be more likely to get published in a “first-tier” economics journal. A further justification would be that unless she gains the promotion, she will not be able to do good Marxist economic analysis in the future. In the meantime, of course, the dominant paradigm is not challenged.

In many intellectual fields like economics, the symbolic violence is most often carried out by the field’s most highly regarded members who serve on the editorial boards of professional journals and the faculty committees that hire, promote, and fire new faculty members. Thus, a young assistant professor seeking to publish and gain tenure will be “well-advised” by her older mentors to write articles that apply only neoclassical analysis. Course content in the leading economics departments, dissertation advice, and the selection criteria for research grants further install the orthodox habitus and doxa in the minds of the young students who will become our future economists. Outside of academia, the corporate-funded think tanks, the Federal Reserve Bank in the U.S. and other central banks elsewhere, international agencies such as the IMF, World Bank, and OECD, the business press, and private financial firms also keep the neoclassical models and other elements of the economics habitus firmly entrenched by means of their employment practices, their ability to influence policy and the press, and their money that funds research, publication, grants, internships, and philanthropy.

Kuhn’s (1962) distinction between ordinary science and a paradigm shift may apply here. By intimidating actual and potential purveyors of alternative paradigms, those with the greatest investments in the current paradigm use symbolic violence that effectively protects both the doxa and habitus from contradictory facts, or what Kuhn (1962) called anomalies. If anomalies are openly and objectively discussed and examined, a paradigm shift becomes more likely.

V. The Dialectic, International Economics, and International Economic Activity

So, we have presented evidence of the concentration of production in the hands of multinational firms, we have explained why mainstream international economics has not paid much heed to the growing dominance of multinational corporations in international economic activity, and we have argued that a materialist dialectic provides a framework that could enable international economists to more fruitfully understand the reality of their field. In this next-to-the-last section we take a look at some of the international economics issues that the materialist dialectic could shed useful light on.

Marx on Immigration

Marx wrote little about immigration, even though the international movement of people was certainly a common phenomenon by the middle of the nineteenth century. But when he did address the issue, he quickly extended his perspective towards political economy. In 1870 he wrote a letter to two of his U.S. collaborators concerning British policy toward Ireland. Marx wrote that the British aristocracy and bourgeoisie shared an interest “in turning Ireland into mere pasture land which provides the English market with meat and wool at the cheapest possible prices.” And, the British capitalists had “the same interest in clearing the estates if Ireland as it had in the clearing of the agricultural districts of England and Scotland….Ireland constantly sends her own surplus [labor] to the English labor market, and thus forces down wages and lowers the material and moral position of the English working class.” Interestingly, Marx immediately extends his political economy of Irish immigration: “And most important of all! Every industrial and commercial centre in England now possesses a working class divided into two hostile camps, English proletarians and Irish proletarians. The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life. In relation to the Irish worker he regards himself as a member of the ruling nation and consequently he becomes a tool of the English aristocrats.

Dugger’s dismal dialectic

William Dugger (1989) has been recognized as predicting the corporate hegemony over the world economy. In his 1989 book, he wrote:

Before the rise of the big corporation, economic forces pushed society one way, technological forces pushed another way, and political forces pushed different ways as well. “The resulting movement was largely haphazard, and the society itself was largely pluralistic. Except for during the Puritan period, no one institution dominated it. But now [1989] life in the United States is dominated by the giant, capitalist corporation. Capitalism, Inc. eats away at the alternative lifestyles and institutions that once provided a degree of balance to the society.
Dugger describes how, little by little, the forces that enhanced the corporation’s power over product and labor markets, not to mention the state and its institutions, led to the corporate hegemony that was becoming obvious already in 1989. For example , Dugger (1989, p. xvii) described the weakening of the family as a potential counterbalance to corporate hegemony. He describes how “The corporation first drew in the father, absenting him from the family circle as he pursued career values and learned to interpret his life in career terms. The corporation now lures away the mother too, as more and more women pursue the own corporate careers.” This situation has only become even more clear today.
Dugger also predicts that organized religion and organized labor were also rapidly losing their ability to organize or, in the case of the latter, their willingness to counter the corporate culture. At the same time, Dugger does see the education sector as a possible counterforce, but his optimistic evaluation of the role of education to counter corporate hegemony looks rather naïve today:
The school is potentially a stronger and more enlightening counterbalancing institution than the small town or the neighborhood. The college experience has a particularly strong effect on middle-class youth who move away from home for their four years of college life.” (p. xvi)
All in all, Dugger is not optimistic, even as far back as 1989:
…a working class revolt is distinctly not in the offing. But a middle-class counterrevolution, even without a working class revolution, is occurring at this very moment. And it is the middle class that is moving to the extreme right in a counterrevolutionary fashion, even though there is no working-class revolution to counter in the first place….The corporation has come to dominate the middle class as never before. (pp. xvi-xvii)
So where might the counterbalancing power come from?
Murray’s territorial non-coincidence

The current dominance of multinational corporations in the globalized economic system has produced a new contradiction. On the one hand, the structure of production and the entre circuit of capital crosses borders, but that same circuit of capital operates within an institutional structure that is still largely national. The dialectic suggests that conflicts between the political and economic organizations of society are potentially dangerous for the entire system. Murray (1971, p. 58) warned about this “territorial non-coincidence” nearly half a century ago. While Marxists have long recognized that national economic systems are integrated into a world economic system, ne that Trotsky (Permanent Revolution, p. 10) described as not “the simple addition of its national units, but as a powerful independent reality created by the international division of labour and by the world market which dominates all the national markets.” There is the interesting debate between Kautsky and Lenin over the meaning of this for the structure of capitalism, with the former arguing that in the future capitalism will be characterized by “internationally unified finance capital in place of the mutual rivalries of national finance capital,” while the latter argued that international rivalry among nation states would continue because “capital is thriving on armaments and wars.”⁹ Murray argues that neither of the two addressed the problem of how the institutions capitalism needs to operate, such as property rights, the legal structure that supports and regulates market activity, the support a national moneys, and the protection of wealth in general, will be able to support a capitalist system based on large multinational corporations with interest spread throughout the world and with little or no national loyalties. Hence the important question: What will be the outcome of the territorial non-coincidence between the corporations that dominate monopoly capitalism and the national government they depend on for institutional support?

Murray offers some suggestions for bridging the growing non-coincidence: (1) annexation of national states (more colonialism), (2) subordination of small states by larger states, (3) private takeover by multinational firms of former state institutions, (4) all states are pushed to provide a harmonized set of institutional supports that multinational firms need, or (5) new international forms of governance are created to replace the nation states.
Some closing thoughts

The argument between Kautsky and Lenin has not yet been definitively settled, as it really can never be in the dynamic, complex evolution of human society as suggested by the materialist dialectic. On the one hand, we have witnessed the establishment of the single currency for nearly 20 European countries, we have the global “Eurodollar” money market, and the dominance of the dollar promoted by U.S. financial interests since Bretton Woods and still backed by U.S. military power. Nevertheless, there are still many national currencies, and the Brexit vote suggests there will be national currencies for some time.

On the other hand, countries are still negotiating international “trade” agreements that contain ever more powerful State-Investment Dispute Settlement mechanisms that clearly undermine a national government’s power to establish national regulations, laws, taxes, and other rules that impact international corporations. In fact, the Trans Pacific Partnership that President Trump withdrew the United States from has just been completed by the remaining 11 countries, and the agreement contains a SIDS clause as well as other rules that restrict national policy sovereignty.

Despite the widespread protests, votes, and economic arguments against the continuation of neoliberal economic policies, all international institutions, such as the IMF, World Bank, BIS, the European Central Bank, etc., continue to push governments to adopt capitalist-friendly neoliberal policies. And the European Union continues to push countries in that same direction through various agreements and ruling bodies, despite the political backlash that now shows up most often in the form of votes for extreme right-wing candidates. There seems to be more tolerance of fascism than economic diversity within the EU, but given the hegemony of multinational corporate capital, that should not be surprising. Capital has always preferred fascism to even mild democratic socialism. And the extension of NATO to a global military alliance dominated by the U.S. continues unabated, increasingly fueled by imagined or exaggerated pretexts.

Overall, it is not yet clear how the hegemonic multinational capitalists will deal with contradictions such as the territorial non-coincidence we observe. But so far, they have dealt with it better than those who might use the contradiction to overturn the current course of events toward a global corporate totalitarian system. Where is the counterrevolution going to come from?

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1^ Carl Shapiro (2017), “Antitrust in a Time of Populism,” Working Paper, Haas Schol of Business, University of California, October 24, 2017.

2^ The Economist (2016), “Too Much of a Good Thing?”, March 26, 2016.

3^ Grullon, Larkin, and Michaely, p. 7.

4^ See, for example, Gary Burtless (1995) and Lawrence F. Katz and David Autor (1999).

5^ The structuralist school was related to the French philosophical movement led by, among others, the anthropologist Claude Lévi-Strauss. This philosophical movement replaced existentialism as the dominant philosophical mood in the late 1940s and 1950s. Rejecting the idea that humans make choices according to their free will, structuralists hypothesized that human behavior is determined by various structures, or in terms of our holistic language, systems.

6^ The materialist dialectic was independently developed by a member of the working class, Joseph Dietzgen, about the same time as Marx developed his ideas.

7^ Engels (1886), p. 2.

8^ For example, feminist economists, such as Waring (1988), Benería (1992), Himmelweit (1995), Folbre (1996, 2006), have criticized mainstream economics for ignoring household activity as a major contributor to economic production, and there are estimates that value non-market activity to be on the order of measured total GDP.

9^ Kausky (1915), Die Neue Zeit, No. 5, April 30, p. 144; Lenin, V. I., The Collapse of the Second International, p. 22.