The title is provocative—and, during a week in which the Dodd-Frank financial reform law is celebrating its one-year anniversary, fairly appealing. “How to Liberate America from Wall Street Rule” is the heading of a new report by the Institute for Policy Studies. It proposes, according to IPS, “a six-part agenda for ending Wall Street’s disastrous hold on the economy.”
We won’t go into all the policy recommendations in the report—of which few, if any, stand a chance of being implemented in the United States today. But the IPS analysis turns out to be only partly about Wall Street. Equally important as a theme running through the paper is the desire for local control in an age of multinational giants.
On this score, the report suggests that we “rewrite international trade and investment rules to secure national ownership, self-reliance and self-determination.” It cites “cooperative, worker- and community-owned enterprises” as “positive examples” of securing the “economic sovereignty of people.”
He certainly understood the resentment and distrust that has built up against multinational corporations, a distrust with which he partially sympathized. “The multinational is seen as a means to evade, if not to subvert, political authority and of creating a superpower, not accountable to anyone and yet in control of economic policy, of jobs and even, to a large extent, of policies in noneconomic areas,” Drucker observed in Management: Tasks, Responsibilities, Practices.
Unfortunately, however, there is no easy solution. “To reassert against the multinational the reality of national sovereignty is also futile,” Drucker warned. “This is what De Gaulle tried to do. The only result was a rapid decline in the competitive position of the French economy in the world.”
Drucker also was cool to worker-owned enterprises. “Worker ownership…has a long—though not a very distinguished—history,” he wrote. “It has worked only as long as the enterprise is doing well. . . . As soon as business profits drop, worker ownership no longer resolves the conflict between wage as living and wage as cost.”
What Drucker did believe was that to the extent multinationals were a problem, they should take the lead in proposing solutions. “They are problems which it is the duty—and the opportunity—of top management in the multinationals to think through,” Drucker declared. “Otherwise, it is safe to predict, political solutions will be imposed on the multinationals which can only damage them and the world economy.”
What do you think: To what extent, if any, should multinationals be reined in?