The problem revolves around an investigation of the “mode” of function of these monopolies and the impact of their activities on the domestic economy.  One may be tempted to ask: What is the effect of these monopolies on the “size” of investment in economies of poor countries like Tanzania?

 

Here lies the answer, albeit in a historical context and perspective: the dualist doctrine of the global economic and social history of the human race can be reduced to something like this: Throughout history, the whole world was under developed in the sense that the Third World is today.  Then, some time between four and five centuries ago, a small part of the world in Western and Mediterranean Europe “took off” into development.  Later on their offshoot, the USA, shot into the orbit of development.  This take off became possible, we are told, because, like Minerva from the head of Jove, these countries developed the institutions and habits associated with capitalism.

 

What this theory does not explain is why there was no “lift off” for the rest of the countries of the world until two major countries, Russia and China, had a drastic social revolution; and why particular countries like Tanzania, Nigeria, India, Latin American Republics etc., which have been under the hegemony of Western Capitalism, had not been visited by the Zeus of development.

 

On the whole, the economic “dualists” treat the inequalities within the economies of the Third World as separate and largely independent economic and social structures, each with its own history and dynamics, in this sense, the plantation or mining sector of an underdeveloped country is viewed as an enclave of the developed metropolitan economy on foreign soil.  Similarly, in a supposedly less developed country, part of the population are said to be outside the market economy and marginal to the society as a whole.  Whether the duality is attributed to cultural, social technological or other causes, this conception gives rise to a diffusionist theory and policy regarding the diffusion of capital, technology and institutions as represented today by the Multinational Corporations (MNCs).  

 

The main feature of a Multinational is that, the company owns capital abroad and the profits from this capital are attributable to the shareholders in the parent company.

 

The multinationals tend to centralize high level decision making occupations in a few key cities in the advanced countries, surrounded by a number of sub-capitals, and confine the rest of the world to a lower level of activity and income, that is to the status of towns and villages in a new imperial system.  Income, status, authority, and consumption patterns would radiate out from the centres along a declining curve, and the existing pattern of inequality and dependency would be perpetuated; the basic relationship between different countries would be one of superior and subordinate, head office and branch.  

 

Among the typical examples of multinationals are Lonrho, Unilever, IBM, Ford, Phillips, ICL, Royal Dutch/Shell and British Petroleum, Anglo Gold, Cargill, only to mention a few of them.  Another central characteristic of multinational corporations is the predominance of large-scale firms with annual sells running into several millions of dollars.

 

Although the multinational corporations are likely to develop distinct advantages which can be put to the service of world development, their ability to shape demand patterns undermines the ability of poor countries like Tanzania to pursue national and international objectives, because they can influence the lives of people and policies of governments, determine the pattern and terms of trade and pursue corporate objectives.

 

Multinational corporations should be viewed to constitute a threat to our economies, not only because they exploit the poor, produce too much wealth for their shareholders abroad, gobble up too many raw materials or create inequalities, but because they make it impossible for small nations to intervene on a large scale on their home economies.

 

This puts local business to considerable inconvenience and cost, since foreign-based competitors can avoid some of these blows on account of their limited exposure to the policies of any host country.

 

Multinational corporations stunt the growth of local investment.  Once opportunities have been taken over by foreign multinationals, and once new consumer patterns have been built in cooperation with the industrial West, then independent national economic development by our nations is impeded.

 

This is due to the fact that many enterprises, controlled from abroad are like “enclaves” which swallow local resources and, as a rule, do not merge with the production and economic complex of the countries where they are situated.  First of all they exist to meet the demands of the parent state and not of the local economy, and often are technological link between other larger enterprises.

 

As a result, it is not the enterprises of the multinational corporations that integrate into the local economy, but rather the “enclave” economic sectors of the developing countries integrate into the international economic empires of the monopolies.  This seriously undermines the national industrialization plans of the young, poor countries like Tanzania and the rest of the Third World.

 

Further, the Multinationals have lately been trying to utilize more and on a broader scale the new model of dependence, based on the scientific and technological superiority of the developed countries over the developing ones.  It is common knowledge that the Multinationals skillfully apply the achievements of scientific and technical progress at their enterprises.  And in the young states, this technical and economic potential is utilized by the monopolies, mainly to boost profit from the exploitation of their natural resources and cheap manpower.

 

As institutions and agencies of a class society, the MNCs foster the emergence of a group of merchants expanding and thriving within the orbit of foreign capital.  Deriving their profit from the operations of foreign business, this “comprador” element of the local bourgeoisie will use its considerable influence to fortify and perpetuate the status quo.

 

How does this underdeveloped middle class spend its profits?  This is characterized by conspicuous consumption rather than virtual accumulation of wealth.

 

One the other hand, energetic, talented, entrepreneurial types are enticed into working for the MNCs, there is less likelihood that there will be effective, assertive leadership to move the economy forward along autonomous lines.  A career in a multinational with its material ties of good salary, liberal fringe benefits, retirement provisions and possibly a Swiss Bank account, robs our nations of talents.

 

The MNCs can increase unemployment by upsetting the local labour market by encouraging capital – intensive methods of production, or by shifting labour elsewhere.  For example, the mining companies can absorb most of the country’s labour, leaving little for agricultural sector.

 

This can cause fluctuations in employment when mineral prices are low; secondly it can force the country to produce less food than it requires and in the final analysis she has to import food to make up for the shortage. 

 

Multinationals that have contributed significantly to the integration of the Western World’s economy and to the linkage of our countries to this more integrated economic growth, are a permanent impediment to our stable political and social development.

 

By fostering “branch – plant industrialization”, multinationals saddle the Third World nations with a type of production unit that allocates scarce capital for the manufacture of goods introduced from abroad, and not necessarily well-suited to promote national industrialization.

 

They supply industrial technology and equipment that is often significantly below the standards applied in their parent company.  This, together with small domestic markets in our countries, combine to put us in a poor position for competitive industrial production.

 

Furthermore, modern equipment, especially automated machinery, creates unemployment.  At a time when Africa in particular and the Third World in general, need more basic employment opportunities, the handicap created by the MNCs becomes self-evident.

 

The days of gun – boat diplomacy are supposedly gone, but boats and the guns have been replaced by powerful international bodies – the multinationals.  Because our individual states are smaller in population than many industrialized nations of the world or economic blocs, our economies will continue to suffer from arrested development.   It is therefore difficult to build efficient industries exploiting the economies of scale within markets defined by constrictive state lines.  This is why the MNCs will always out-manoeuvre us.

 

Moreover, since economic and political fragmentation go hand in hand, one can even speculate that, if our individual states continue to establish their own protected markets, the political and economic motives of bodies like the African Union (AU) which would like to see economic recovery of the “Wretched of the Earth”, will remain a dream.

 

Therefore, the solution to our problems will either come from ourselves or it will not come at all, and that the total effort of the Western World through the MNCs, is going to do little for us beyond creating mirages.  And as Kwei Armah warns us in his book:  “The Beautiful Ones Are Not Yet Born”, “there have never been people to save anybody but themselves, never in the past, never now”.