U.S. POWER AND THE MULTINATIONAL CORPORATION: The Political Economy of Direct Foreign Investment

Professor Gilpin's cost/benefit analysis of the multinational corporation, using the logic of game theory, bases its projections of the future of American political economy on a comparison of the parallels between the 20th century strategy of direct foreign investment and the denouement of 19th century British imperialism. The fly in the ointment is identified as the shift in wealth (and as its function, power) from the financially elite ""core"" outward. Thus, while corporate investment abroad reaps short-run profits, the domestic strength of the investor is undermined and resources trickle down to less developed areas in a kind of economic entropy. Gilpin rejects both Marxist and mercantilist modes of thought, proposing instead a liberal reassessment of U.S. policy with the intention of fostering an interdependent international economy. He argues that the U.S. can only maintain its hegemony (as banker, soldier, manager and technician to the world) by fostering research and development in civilian areas of science and technology; and by recognizing the new, expanded role of regional blocs (presumably the Common Market as well as the OPEC nations) in worldwide economic decision-making. This is an intelligently reasoned and clearly expounded position that nonetheless seems to have been developed in a university test tube. Not only is this a case of too little, too late, but it fails to take account of that most significant factor named Kissinger, who makes Adam Smith look better all the time.