The First Amendment; Bruce McKenzie: Multinational Companies

The. WGBH Boston in cooperation with the Institute for Democratic communications at the School of Communications at Boston University now presents the First Amendment and a free people. An examination of civil liberties in the media in the 1970s and now here is the director of the Institute for democratic communication. Dr. Bernard Rubin. Welcome to this edition of The First Amendment and a free people I'm delighted to have as our guest today Professor Bruce McKenzie. Our subject is the multinational corporations and how they influence life in other parts of the world on matters that really pertain directly to our conception of freedom of speech press assembly a right to petition government and so on. My co-host is Professor out of leverage are there both of the Boston University School of Public communication just a word to Bruce about your background I think is relevant here because you have had a cement amount of experience with multinational corporations.

Professor McKenzie is formerly the president of the international man and Management Development Institute of New York and the former director of communications and international relations for IBM worldwide trade corporation. Also in a very altruistic job in a very important one he was Peace Corps director in the Ivory Coast in 1963. Bruce you've seen it both ways from the company point of view from the government point of view and I think this is interesting. I'd like to open with this question. Given the difficulties that we have been communicating our concepts of freedom of expression which are inherent in the First Amendment. Do you think the multi Corporation has been exercising enough social responsibility using multinational corporation as a generic term. Or has it been a laggard in representing the best

ideals of the democratic revolution. Well it's certainly an interesting and I I have to remark a somewhat loaded question implicit of course is that the multinational corporation has not indicated the same level of social responsibility overseas that it has perhaps indicated in the United States or perhaps the same level or perhaps the same level. It was very interesting last week at a meeting of the National Council on to a lancer fee where we had representatives from three of the largest multinationals and discussing the need for increased giving or increased international philanthropy transnational philanthropy by these corporations and comparing the figures that I cited of course it was a very very small amount for the rest of the world certainly in the neighborhood of a third or a fourth of what was spent in the United States. I think that indication of. A lack of concern with other than the commercial or economic aspects of trade overseas

became very apparent during this meeting. But I do feel to answer your question more directly that multinational corporations have. Had as a policy to do what was normal overseas for the national corporations. Not too much more not too much less. And as a result you will find in some corporations where there have some countries where there have been a large amount of corporate support of various social works good works or communications or civil rights programs. Then you would find a multi-national in that country conforming you would almost never find a multi-national company in the lead trying to be conspicuous in leading other corporations. One of how does this comport with your interpretations and how would you phrase the next inquiry. Bruce based on your experience as an economist. My experience my first experience with multinationals was in Chile

back in around 1900 and 60 and their firm impression that I left with admittedly only after three weeks was that we were exploiting 19th century capitalism. Now in other words my impression was that the people who were there running American companies were people who were the entrepreneurs people who had to say this to justify what they did in part. They saw a very unstable situation in Latin America as a whole they felt they had to make their money fast. If they invested in new money or in the case of the utilities they saw signs that they might be nationalized and therefore they thought well we'd better get our money out fast and therefore charging. Rates which

even Americans who work there thought were exorbitant and producing a self-fulfilling prophecy so it's a tough situation to be in. Looking at it from the viewpoint of American corporation but nonetheless for most of the American companies there at that time I did not see the kind of attitude of social responsibility a long range planning if you will that I saw here and oddly enough at the time the company that hasn't how been severely criticized for its actions in Chile I t t impressed me at the time as using modern management techniques and maybe as we have learned over doing things I'd like to pick up on our thought here about Chile and just just run down a couple of the more recent kinds of problems for example in Latin America Chile is a very sore spot

amongst many people. Democratic persuasion who are also Republicans Democrats independents and they very much. Brazil is another sore spot. They are under dictatorial control. The continent is ridden with them. Our past history in Cuba. Really Doesn't it really gives us pause when we consider whether we ourselves are to blame for the animosity was gave rise to Castro in the current events in Africa we have the same thing in South Africa and Rhodesia and so on. Given all of this are there innovative leaders. Bruce Mackenzie who feel that something ought to be done to correct the past practices or poor attitudes of multinational corporations based from headquarters in the United States. I think I'm glad you pointed out that not all multinational corporations are in the United States so I can really only speak.

Those corporations I've dealt with those multinationals both in the extractive industries and in the product or service industries and their operations in Latin America and Africa primarily have been my areas of interest. I would have to say at the present moment I have seen an increasing tendency towards nationalization of the managements. Certainly in the less developed countries real programs innovative expensive not always commercially justifiable in the short run for African ization of management or Latinization of management. Sending good candidates primarily one has to admit from the elites in Latin America to American business schools or underwriting good business schools in Latin America. I feel it. Companies including the extractive companies like Exxon IBM General Electric Westinghouse and others are proceeding proceeding rather rapidly. But again within a

very narrow definition of those areas where they feel competent to aid in development to be a partner in development with the skills they have certainly the kind of management that out of their body refers to back in the early 60s middle 60s I remember certainly is another era I would say. It is principally passed by the regimes the political regimes in many cases are the same or have the same features. The industrial representatives the business representatives the Americans who are active in these countries or the Brazilians who are the Argentinians of the Colombians are the Venezuelans that management positions now are another breed they're a new breed they're they're products of the business schools they they have a much broader concept of the corporation's role in society. But given that you know for more than a decade we don't we can't be. A. Fine point on this we just know for more than a decade. There have been more

representatives of American multinational corporations representing American interests abroad in numerical terms than representatives of government departments state departments and all the others representing the United States abroad. Is there any reason for you to believe that management training programs have been sufficiently inclusive of some of the subjects that deal with freedom of speech. In other words if we are going to to incorporate new management concepts and change the mode and be an American it be in the American mode. Do these people that represent not loading this question are really asking Do these people that represent these companies have the training the sensitivity to understand that American vital interests are linked abroad to the to what the founding fathers put in the Constitution.

I think this is what this leads into a broader question now if we're talking truly about multinationals who view themselves as multinationals. There is already a conflict in terms about American values First Amendment our concepts of freedom of speech and whether indeed we have any right of multi national representative should in any way shape or form try to promulgated what is our ideology in that area. It's sort of like those who are considered healthy by Americans are at a very high standard of health indeed in the less developed countries people are healthy who have three or four diseases in their system at all times would be considered very sick here indeed. I think freedom of expression is relative in many of these countries where you are not put in jail for a direct assault on the government or at least or even an indirect allusion to the corruption or inefficiency and so forth that is already freedom of expression compared to what they have known before.

I know Bruce in the United States I think it's fair to say that the posture of the major corporations is that they should speak out on any public affairs issues that might affect them as a company and an industry. I know it's still a little bit controversial but I see the majority of the large companies going in that direction. Now is that policy a viable one. When you're talking about an American multinational corporation doing business in a foreign country if that company sees a foreign government taking action that threatens its interests. Should it be should the same norm apply. Should it be allowed to speak out or should it keep a low profile and adjust to whatever the Nationals want to do. I have two tough questions. It's a very tough one and I I can say what the practice

is very easily that isn't tough at all. Very low profile in counseling and national companies. When I was director of communications for IBM World Trade in Paris counseling the president of IBM Germany or his director of public affairs or IBM Italy or IBM Spain it was clear that while I was an American. I had to have a truly multinational understanding of the reality politique in Germany in Spain or Italy or France. I could not. Recommend policies that were essentially appropriate in America but might well not be there all I could do would raise the question. Try to. Illicit justification what it usually ended up being a justification for doing nothing new or innovative. And then in some cases with a certain target country we might indeed with the agreement of IBM Sweden go into for example go into a much more outspoken

participative sort of social action. It was and very unusual I think it is in most companies Frank. I like to bring up a conclusion that was found in Committee on Finance of the United States Senate report of 1973 with the very austere and fancy title of implications of multinational firms for world trade and investment and for U.S. trade in labor it sounds official. But it one point they talk about the multinational and American foreign policy and they say that there's never been a real confrontation. At least it wasn't in their view. 973 between multinationals and the objectives of American foreign policy which are right now to pursue the objectives of freedom. But they said at one point a caviar is in order here. However since there never has been a major confrontation between the multinationals and the U.S. government on an issue which vitally affects multi national interests it is not entirely safe to say that such a confrontation would not

lead to a challenge of U.S. policy by these companies. My question to you is given the shortage of materials in the world is it possible that in a major confrontation the companies would downplay it as an impractical matter. Civil rights practices as against the availability of manganese scrum or whatnot. I think the the corporate policies as enunciated and the corporate realities as carried out might not be totally consonant. I have the feeling that I asked this directly that most corporations multinational corporations will support policies that will maximize their short term two to five year two to three year earnings picture as long as it doesn't put them in the

role of being a policeman or in a sense anti-social within the environments in which they operate. I don't think you'll find I think it will. To answer your question the many occasions in the future where multinational corporations will support policies that are not the policy foreign policy interests of the United States. So therefore our company our country will be known by virtue of the activities of these companies overseas and we're likely to have more implications of such scenes as took place in Guyana. We had a representative from gonna come and talk to bauxite and he said the method used in the approaches. Finally so offended everybody when they got independence one of their first objectives was to strike out against in effect the American capitalistic system as represented by that company. Is this not a dangerous street that the companies play for profit.

When I and I would again divined that the companies who see themselves in the extractive companies have a different set of problems management problems economic problems then those who for looking at looking to these countries as markets for their products and services. I think you can reasonably project a different attitude or a more enlightened attitude a more socially responsible attitude if you will. Those countries who foresee a long term coexistence partnership and development type of activity for a large new developing markets and with economic growth increasing markets agreed under changing conditions of our own maybe not total ownership or even nationalization. These these people these firms their policymakers will certainly decide I think differently than most. Most occasions from those whose existence in the past and least in the short term future is primarily in extracting resources from the soil and from the Far East from the.

See these two for after minerals. We are less concerned with. Or after the extraction of something from another can do with less concern with human values as a as a problem or not I don't. I wonder if some Americans don't expect American corporations to have a higher morality than they expect of the US government for example that a well known case study Polaroid in South Africa usually ends up with that kind of statement by a lot of students that although the US Government recognises South Africa that a higher morality is expected of Polaroid too namely to stop selling its products over there so we have a little conflict of values. And there we're not only saying that American business may put its profits ahead of the Public Interest a seen by the US government but sometimes were saying that

we want a corporation to act more nobility than our own guardians are and when some say something of a discussion you know over that old adage the business of America is business and we're really suggesting that in the constitutional sense somehow or other we're wondering whether given business interests we can possibly get people overseas to see that the business of America is something other than business and I think you're right out of that. There is a call to demand more of international multinational companies then. Sometimes you get your own Congress on a given question. How do you see it. When I feel that the company can be a multinational company can become in some cases today even he is on the cutting edge and as a leading is a spear point of human rights lobbying in a sense of pressure in a sense within a variety of foreign environments. I think Polaroid made some very courageous choices I remember when I was in IBM at the time and we were considering what our

policy in South Africa should be. And we noticed this initiative and then initiatives by other companies. Their pressure by black American groups as well on us and which we are very responsive to these. This is a big market in the United States where is of course the single largest market. So then we we felt that and I can remember the recommendations of our taking everything the alternatives considered to pull out all together. To severely restrict our new investment. A whole variety of choices. And finally I think it was a very mature attempt to get the best information from the National Council of Churches who were very opposed to our continued presence there. The National Association for the Advancement of Colored People all their opinions the National Urban League. Even though these were not necessarily foreign oriented basically. And as a result I think the multinationals again the those in the product and service industry

are in a position to take more courageous leadership and the public justifiably expects them to. On human rights and it's not that is not as sensitive in many countries as some of the other policies the economic policies the repatriation of profits and you know transfer pricing and shifting of currencies about the world. Governments will put up with quite a bit feeling at the least we are only impacting a small number of eventual change agents perhaps but who who will nonetheless contribute to the development of a country. Bruce are we going through a new phase with regard to the economics of multinationals in the early phase where our capital is wanted. We're welcomed in foreign nations. Then when we've stabilized and there's no need for further capitalization but we get to a stage where the investors have to be repaid where

profits are sent back to the home country then it seems to me nationals in other countries get upset. For example I remember in Australia about eight years ago reading a headline that General Motors was sending half a million dollars to the United States and a lot of the Australians I met were noms about what is this our company. HOLDEN I think it was it that the progression you describe sounds like the average mother and father took John to the grave. Well this is the one who really rewarded you. He parts a similarity. You know you talk about adolescent stages and so forth. So are we at. Are we moving into the stage where we're going to be unpopular because we're not seen only as investors in foreign countries but also as people wanting a return.

I guess we have to separate the two types of countries. I have to and I've been thinking more because the recent experience in less developed countries if we're talking about investments in Europe for investments in the Far East or vestments in certain countries in Latin America that really are not developing countries like for example Brazil which is highly developed in certain areas and developed another. I would say we are approaching that point in the industrialized countries. I think in the less developed countries. There are very few occasions where we're trying to pull back lots of money quickly. You know there is first of all the volume of our investments is not that loud. Second of all the the time for the maturing of these investments again other than in the extractive industry is so much longer that we there is no great pressure. It's a very small percentage of the earnings of a large multinational like G.E. or IBM for example. What we are in the developing world.

You might think of as a loss leader in any case really at this point is information about what goes on in individual countries. I really kept that separated separated anymore or does what we do in a more advanced developing nation get to be known say in a developing African nation. Certainly no not oh no that isn't the question but I mean the the financial decision makers the and the development bankers the industrial and political leaders in the developing countries are very aware. I mean the IMF meeting going on in Manila now that and earlier meetings in Colombo and I mean there is information is exchanged and there's a really. I think quite sound understanding of the financial realities the investment realities of elemental realities and what can be expected. Obviously the pressures from the out from Ted and the nonaligned nations are going to be for a better terms for investment for less repatriation of

profit profits and so forth. But I'm not care I I don't see a confrontation coming I don't I don't see I see this as an evolution where investors are going to have to accept a longer term return on their investment. They're still going to want to do it because those are large markets because world stability is involved social order is involved. I don't think it will be a major factor in this frankly will be our concern about the forms of government in these countries or the human rights in these countries. In fact I find kind of an embarrassed. Silence in the corporate halls for which or I have walked it when you bring up social responsibility when you bring up human rights abroad in the United States nowhere fine but abroad. There's a great milers when you bring up the subject and you're immediately like in this meeting with the National Council of the land looking multinational What do you do. What do we know.

Would it be welcome. Are we being honest with ourselves. Do we know how to do that well and so forth. Bruce how much of the pressures upon multinational corporations based in America for representing the ideals and the virtues of our Constitution actually stems from the popular worry or anxiety or concern brought on by recent events which have them up in arms about domestic works like giant corporations. I don't think it has really been reflected yet I think there is such a distrust of the large multinational as a large foreign trading or international corporation right now that the American public would hardly look to them to be the purveyors of truth and morality. I faith there's a a great work of renovation of the the corporate image if you will and the corporate reality that we have to start from basics.

I was brought up to believe my first knowledge of the multinational was Daddy Warbucks and his friend Punjab who wish to bring you around the world opening plant number 76 here and there. We have one minute would you be. There's a big movement in United States. Toward greater social reporting. Also the social audit movement. Do you think it's a good idea for an American multinational to do a lot of social reporting in their host countries telling them the good that they're doing for the country also being fair in saying well you know here's the negative side talking about social costs social benefits. Is that a. Although I do agree I think that it shouldn't and we are certainly promoting those policies and many of the multinationals in Europe less so perhaps in the developing countries. I feel that your suggestion about social auditing social responsibility participate of a decision making about the corporate goal setting is very important. It is becoming a reality in Germany and certainly in Sweden even in Italy of

course now and in France. And we should promote it I feel American multinationals have a responsibility to urge their as their affiliates to promote these policies. But I want to say that whether we take joy or moralists realistic appreciation from the comments made today to the thinking of the people listening to it I would rather have the realistic appreciation than joy because we ought to know what is going on with multinational corporations and not extend our democratic revolution through them and those they are capable of it and maybe we have a big problem here. Certainly I don't have a problem in looking back on this half hour and thanking you Bruce McKenzie for joining us and my co-host. I don't live in your This is Bernard Reuben saying goodnight. WGBH radio in cooperation with the Institute for Democratic communications

of the School of Communications at Boston University has presented the First Amendment and a free people and examination of civil liberties and the media. In the 1970s this program was produced in the studios of WGBH Boston.