At the very beginning of the world, when Adam and Eve were driven from the Garden of Eden for disobedience and told that they must earn their bread henceforth by the sweat of their brows, Adam consoled Eve by saying: "We live in an age of transition." For them change was both rapid and drastic. Moreover, the physical change was accompanied by an equally great alteration in their value systems-they quickly learned to distinguish good from evil.

All history since has been dominated by change. Today, as at the beginning, change is swift and startling in the scientific and technological world, but it is the changes in our value systems that cause us the most agony. Despite protestations that innovation is welcome, mankind in general and sovereign authority and bureaucracies in particular resist change to the bitter end. Nothing upsets us more than to be told, as Abraham Lincoln once observed, that "our purposes differ from those of the Almighty." Everywhere change is popular in concept but uncomfortable in practice. The canny bureaucrat never opposes the idea of change; instead, he throws up a smokescreen of plausible reasons to abort change . This rearguard action takes many forms. Specifically, whenever the

Today, as always, we are in an age of transition, and as always various segments of society are moving at different speeds. The value systems of the young generally change faster than those of the aged. The scientist who split the atom finds that his disciplines have moved at a faster gait than have their counterparts in international law. The economies of the developed countries move at a pace different from those of developing lands.

A few years ago, Thomas Hughes wrote at least half seriously:

One can say that the twentieth century is currently made up of fourteenth century farmers, fifteenth century theologians, sixteenth century politicians, seventeenth century economists, eighteenth century bureaucrats, nineteenth century generals and twenty-first century scientists.

It is not a bad analysis save for the American farmer, who belongs to the twentieth century.

Such discontinuities in world society are partly responsible for the current concern about world corporations. Those multinational companies have been blamed for everything from interfering in the political affairs of host countries to causing the revaluation of currencies by speculating on the international markets.

Yet the great global corporations of the world are now the principal agents for the peaceful transfer of technology and ideas from one part of the world to the other. Since no country has a monopoly on industrial and agricultural skills, this transfer of men, money, and ideas is necessary if we are to raise the world's living standards, but the perceptions of the needs of mankind are not uniform in the public and private sectors. As a general rule, the politicians have been engaged in fragmenting the world, while the multinational corporations have been viewing the planet as a single marketplace, and drawing peoples together in the process. The clash of these perceptions has understandably created a great deal of intellectual friction, which has been manifest in great outpourings of scholarly and not so scholarly attempts to clarify the issues between the public and the private sectors. We have witnessed lengthy debates about such weighty details as whether we should call a company multinational, transnational, international, supernational, or perhaps some other term in some other language. None of this rhetoric has been really useful. It is the kind of clarification that consists of filling in the background with so many details that the foreground sinks out of sight.

What has tended to be pushed from sight is the real nature of the choice confronting us. The arguments that use the world corporations as their focus are only a proxy for the real issue. The struggle for control of the future is not between national companies versus international, nor European companies versus American or Japanese, nor even the fashionable theme of the developed countries versus the developing, most recently styled as a north-south confrontation. The debate is really the continuation and intensification of the battle between two historic ideas concerning economic and social behavior.

One idea, associated with terms like "free trade" and "free enterprise" and "laissez-faire," holds that business is politically neutral, existing only to satisfy the economic desires of the world's people. The other, older idea holds that business is-or should be-the chosen instrument of the state; or, what

In order to draw any useful conclusions about the place of the world corporation in this dispute, it is necessary to set multinational enterprise in historical perspective. It is then possible to comprehend why our world corporations are so profoundly upsetting to so many people in and out of governments around the world.

Each of us in every country is the child of individual experience. The difficulty in communicating our value systems to one another is further complicated by the fact that the cultural histories of others do not have high priority in our national universities. In a word, we tend to be ignorant of other societies.

Despite the enormous advances in communication and the remarkable technology for instant transfer of visual images via satellite, we are still surprised and amazed when people in different parts of the world espouse value systems radically at variance with our own. It astonishes many Americans to find that some of the ideas of Colbert, the finance minister of Louis XIV, still appear to dominate a certain section of European thinking about trade and investment. The highly restrictive purchasing regulations in effect in many European countries stem from Colbert's dictum:

All purchases must be made in France, rather than in foreign countries, even if the goods should be a little poorer and a little more expensive, because if the money does not go out of the realm, the advantage to the state is double.

In my own country, some of our Buy American laws were passed, unwittingly, under the influence of Colbert's dead hand.

To a European or to a Japanese, it is elemental that foreign trade is a country's lifeblood. Trade generates the revenue that sustains their governments. Foreign trade should inevitably

There are other, deeper roots for this hostility, however, which date back to medieval times. The first merchants, traders, and moneylenders were motivated largely by profit considerations. Feudal barons, on the other hand, looked to military power for survival and expansion. As competition between feudal rulers increased, the merchants and traders began to associate themselves with the sovereign authorities to gain commercial advantage. In return for commercial favors, they financed the wars of competing sovereigns. Merchants bankrolled the Crusades. In return they got monopoly powers to trade in large areas of the known world. The fusion of the tradesman and the royal sovereign in the sixteenth and seventeenth centuries eventually became known as mercantilism, and all external business was conducted by the chosen instruments of the state. It is not surprising, therefore, that developing countries now believe that the navy always follows the traders; if, indeed, it does not precede them. In the mercantilist world, commerce and industry were viewed as what present-day mathematicians call a zero-sum game; profit for one side inevitably meant equal loss for the other. The reality that buyer and seller could both profit from the same transaction defied mercantilist logic. The truth that business is not a

In the mercantilist world, nations vied for overseas territories in order to control their markets. Many countries set up monopolistic trading corporations to manage trade and supply all commodities to the colonists, whether natives or settlers. There were the Dutch East India Company, the English East India Company, the French East India Company, the Hudson Bay Company and the Virginia Company. Since these companies made a profit, mercantilist dogma made it clear that exploitation of the colonists must be involved. Therefore, this practice of picking a commercial enterprise as a chosen instrument served to intensify the hostility against both the monopolistic companies and the metropolitan country that chartered them. In the American case, enmity generated by this commercial device was one of the precipitating causes of our Revolution. An excerpt from a Boston newspaper printed in 1765 summed up colonial sentiment:

A colonist cannot make a button, a horseshoe, nor a hobnail but some sooty ironmonger or respectable buttonmaker of England shall bawl and squall that his honor's worship is most egregiously maltreated, injured, cheated and robbed by the rascally Americans.

On the other side of the world, trade as exploitation also left its imprint. The Meiji restoration, dating from 1868, marked the beginning of the modern Japanese state. But even that enlightened restoration was based broadly on the concept that Japan could not withstand hated foreign encroachments unless its society was totally reorganized as an industrial power with great military strength. Japanese hatred of foreigners was not new; it dated back two centuries to the edict of 1636, which closed Japan to all foreigners, particularly Christians. That edict also forbade Japanese ships from sailing to foreign

While many peoples of the world were building centralized government structures, America's economic and political impulses developed along contrary lines. Colonial experience led Americans to be opposed to centralization of economic power in chartered companies and to centralization of political power. The separation of powers, written into our Constitution as a guarantee of political freedom, also affected economic thought. The proof of this hostility to the centralization of power is evident from the fact that our basic antitrust law bears the name of a senator whose credentials as a conservative were impeccable.

Moreover, the existence of the frontier tended for many years to influence our thinking. It was not a totally alien frontier, such as existed in the older settled parts of the world, but was merely the edge of untapped resources and an enormous land mass. Our huge continent furnished an outlet for all our goods and services. The development of those seemingly illimitable resources demanded both practical and technical innovation. Because of this heritage, many Americans even today fail to understand that America is only a subsection of the world market, and that our value system is not shared by many others. Thus the Japanese and the Europeans are hard put to comprehend what often seems the strange behavior of Americans. The arrogance of the U.S. Government's desire to export its complicated antitrust concepts around the world is properly viewed by our friends abroad with both amazement and hostility. Governments in Japan and in Europe regard their business establishments as great national assets which furnish the revenue to support increasing standards of living for their people, and for the world's people as well. It is difficult for them to understand, let alone credit, the often inherently hostile position taken

In this country, we are acutely conscious of the mercantilist tradition in Europe and the enormous concentration of power in the zaibatsu complexes of Japan. Many former colonial countries see the chartered monopolies of the imperial nations as the forerunners of today's world corporations. To them, our global corporations seem to be thinly disguised, government directed chosen instruments dedicated to the pursuit of governmental foreign policy under the guise of a commercial establishment. Bitter experience with government-chartered monopolies throughout history did little to create in many of the developing countries a welcome environment for the new worldwide economic structures that began to grow during the great postwar international expansion. Even today, the Sunday supplements love to hint darkly that the modern world corporation is really an instrument of today's nation-state. The suspicion of a modern mercantilism hangs in the air. The days of gunboat diplomacy are indeed gone. We have now come full circle in the western world to what appears to many as the successor to the chosen instrument of imperialism. Thus the world corporation is questioned, not only by the host governments but in many cases by their own governments, wherever the head office may be located, despite the enormous success of these firms in supplying the world's needs.

Part of this attack stems from the clash of historic value systems. As new philosophers, thinkers, and traders appeared on the world stage at the time of the Industrial Revolution, the idea began to dawn that man by his own efforts could improve his lot in the world. Economic growth and improvement and the betterment of social conditions seemed attainable dreams. The enunciation of the principles of free trade and the doctrines of comparative advantage by Smith, Ricardo, and others can be seen as a decisive break with the mercantilist tradition. What flowed from these new ideas was a concept of dynamic economic growth, as opposed to the old notion that profit to one was loss to the other-the zero-sum game. With this new concept came a recognition of the growing interdependence

It was against this background of changing values that the prototype world corporations first began to appear in the latter half of the nineteenth century. As far back as 1865, Germany's Friedrich Bayer built a plant in Albany, New York; the next year, Sweden's Alfred Nobel established a factory in Hamburg; and the year after that, the U.S.'s Isaac Merrit Singer opened his first overseas plant in Glasgow.

In widest historical perspective, then, commercial and political history exhibited an interplay between two basically competing value systems. The first stems from the medieval age and developed through the mercantilism of the sixteenth and seventeenth centuries into nineteenth-century imperialism, then twentieth-century totalitarianism. This was accompanied by the tradition of business as the chosen instrument of government policy. The second value system arose from the earliest merchant and financier classes of the precapitalistic era and grew through the Industrial Revolution. The entrepreneurial tradition of the capitalist, independent of government, is the basis from which grew the adversary relationship between business and the state.

Of course, as in all living things, neither system developed in a pure form. Through the period of the Second World War, there is no question that the mercantilist-imperialist tradition was dominant, though the entrepreneurial tradition, when it gained preeminence from time to time and from place to place, was responsible for much of the progress in general welfare that took place among the world's peoples.

Viewed against this background, the modern world corporation is the extension to global proportions of the business tradition that grew out of capitalism and the Industrial Revolution. It is now learning how to operate in the global marketplace. The motivating factors which drive the world corporations today are basically the same as those which drove

Since time has proved that it is more effective to attack the carrier of an alien idea than the idea itself, the agents of change come under sustained, intensified attack.

All these criticisms overlook a fundamental point. In the tough, competitive global marketplace, it does not matter where a multinational corporation's headquarters are located. Any global company, whether based in the United States, Europe, Japan, or somewhere else, will sooner or later have to operate under the same economic and political rules that govern its international competitors. In order to stay in business, any company is compelled to get its materials for production from wherever they are available most cheaply, conduct its processing activities wherever they are most efficient, and market its goods wherever there is a demand. And all of this has to be done in compliance with a bewildering variety of laws and value systems which have been constructed by our nation-states.

It is precisely this economic necessity that makes the multinational enterprise the best instrument for assuring the most efficient, most thrifty use of the world's resources. In an era when many people express concern that those resources might be squandered, the need to make them go as far as possible and to avoid waste is an economic and human necessity. Yet efficient use of the world's resources does not generate much applause for the world corporations.

The neomercantilistic ideas have never died and still furnish ammunition for critics of multinationals, both at home and abroad. These familiar themes are articulated by some in developing countries who accuse multinational companies of milking the economies of their host countries by taking more out of them than they put in. At the same time that these charges are leveled at the world's corporations abroad, labor leaders at home aver that multinationals are exporting capital,

It is a two-front war. If the international managers prove to a host country that they are creating more wealth for it than they are taking out, this very evidence will be used against them at home. If they prove to the labor unions at home that, on balance, they are creating more jobs at home than they export, or prove to their governments that the repatriated foreign earnings are good for the home country's balance of payments, that evidence fuels the arguments of their foreign critics.

Because of their intellectual training, many of the critics are quite sincere in believing that international managers are lying when they say that everybody profits from their operations, home and host countries alike. The fundamental fact, however, is that the payrolls and jobs of the multinationals exceed profits by a factor of twenty to one. That is a hard fact. It can be ignored, as can anything by the partisan, but it cannot be argued with.

The concept of global wealth creation, however, places a great strain on even the most liberal of modern nation-states. Each ruling government is primarily concerned with optimizing conditions within its own boundaries. All countries participate to some degree in international specialization, contributing to the world economy what they can do best and most profitably. But every country at some point subordinates its possible economic advantages to considerations of military security, domestic stability, the protection of home industries or economic groups, or even national pride. Many of the developing countries, struggling to feed and educate their people, deem it more prestigious to build a steel mill than a fertilizer plant or public schools.

National governments often assert their dominance over business enterprises not only in pursuit of competitive advantage abroad but also in furtherance of domestic political policies. No country permits completely free enterprise, but controls in today's world tend to come from one of two diametrically

One type of government tends to organize its economy to favor public ownership of enterprise. It adopts policies of income redistribution, regulates consumption, maximizes central planning and government allocation of resources. At the authoritarian extreme of this system are countries like the People's Republic of China, the U.S.S.R., the nations of Eastern Europe, North Korea, Vietnam, Cambodia, and the socialist countries of Africa. The fruits of this system are written plain in the current record.

The medium-term economic consequences of such policies always involve depressed internal growth rates and can lead to extreme economic degeneration, as we saw in Nasser's Egypt, Sukarno's Indonesia, and Allende's Chile.

At the other end of the political spectrum, another group of countries pursue policies that favor private business ownership, deliberately depresses current consumption in favor of capital accumulation, permits market mechanisms rather than fiat to allocate resources, tightly controls labor unions, and generally practices social regimentation. These states tend to take a positive view of the world economy and favor policies that foster global interdependence. They usually also experience relatively strong growth rates. But very often these societies produce a serious mal-distribution of income that may ultimately create an explosive social situation. If the situation deteriorates, it is not unusual to see what is euphemistically called a strong military group take over the government.

All the other national economies are strung out somewhere along the spectrum between those extremes. The most comfortable location is somewhere as close as possible to the middle, but it takes an effort to stay there. Every economic crisis creates pressure on governments to flirt with one extreme or the other, sometimes with both at the same time. There is always the temptation to solve short-term problems by exchanging them for long-term instability.

In the long run, both types of controlled economies are unstable. The progressive ruination of the economy in the one case and the social regimentation and inequitable income distribution in the other cause internal pressures for radical change. When internal pressures become irresistible, the regimes in charge may either give ground gradually or be quickly replaced. The transfers of leadership from Sukarno to Suharto in Indonesia, Nasser to Sadat in Egypt, Allende to Pinochet in Chile, and Spinola to Soares in Portugal are examples of how rapidly events occur.

No matter where a government is positioned on the political spectrum, often the public and private sectors are in conflict. This natural interplay has generated a great deal of nonsense about the relative power of multinationals and governments. The facts are clear and simple.

A multinational corporation, no matter how large, is essentially helpless in the hands of a nation-state, no matter how small. Despite overwhelming evidence of this truism, disbelief abounds. The Group of Eminent Persons appointed by the United Nations Economic and Social Council in 1972, at the instigation of the then-Communist government of Chile, investigated the relative powers of multinational companies and the sovereign states. It is not now, nor ever has been, a contest. I can give you one example from New York City, where I live right next door to the United Nations headquarters.

New York, as you may know, is a hard place to park an automobile. Members of missions assigned to the UN enjoy diplomatic immunity. They can, if they choose, ignore the No Parking signs, which many of them do, to the constant irritation of less privileged New Yorkers. If I park my car in my neighborhood, the Police Department tows it away. The head of every global company is in the same fix.

There you see the true difference between sovereignty and the lack of it. If the example I chose seems a little simplistic, it is no more so than books with titles like . Or for that matter, some of the reports that were turned out by the Group of Eminent Persons who parked their cars with

As a last resort, all any multinational company can do in its relations with a sovereign state is to make an appeal to reason. If that fails, capital, both human and material, will leave for countries where it is more welcome. Since men and money in the long run go where they are wanted and stay where they are well treated, capital can be attracted but not driven.

In the long run, it all comes down to this: the future of a global company in any one area will be determined by the degree to which a particular government is willing and able to put the material well-being of its citizens ahead of outmoded political, protectionist, or other local narrow interests. Everything discussed thus far will be resolved almost automatically when our nation-states make up their minds concerning that basic question.

The reality of a global marketplace has been the driving force pushing us along the path of developing a rational world economy. Progress that has been made owes almost nothing to political imagination. It has been the managers of the multinational corporations who have seen the world whole and moved to supply mankind's needs as efficiently as politics would allow. The thousands of jobs and products that have helped raise the living standards of mankind have made this economic process highly visible to millions of people. Far too many of the world's people have now seen what the global shopping center holds in store for them. They will not easily accept having the doors slammed shut by nationalism.

The development of the truly multinational organization has produced a group of managers of many nationalities who really believe in one world. They know that there can be no truly profitable markets where poverty is the rule of life. They are a group that recognizes no distinction because of color or sex, since they understand with the clarity born of experience that talent is the commodity in shortest supply in the world. They are managers who are against the partitioning of the world, not only on a political or theoretical basis but on the

They realize that the engine that drives the growth of nations gives humanity the wherewithal to deal with the wretchedness of the human condition. They have learned that the multinational corporation can function amid diverse value systems, though like all instruments of progress it must move in a resisting medium.

Woodrow Wilson proclaimed a league of free nations but the League of Nations did not survive. Wendell Willkie argued, correctly, that we have one world, a fact that the astronauts vividly proved. Nevertheless, the politicians of the world will not act. The political problems of the United Nations are a stark manifestation. The divisiveness of the European Economic Community is further evidence. Despite all our advances, the world is still socially fragmented and the incompatibility of the world's value systems has always been and still remains a cause of potential conflict. History is replete with the tragedies wrought by the efforts of one society to impose its concepts upon others.

Agents of change involve new ideas and values. They have never been welcome in any society. This is especially true when the carrier of new or strange values is, or is thought to be, alien to the society that is affected. Often the most effective way to resist change is by identifying the carrier of the new values as foreign. The word for "foreigner," from the Golden Age of Greece right up to the Middle Ages, was "barbarian." Anyone who spoke a foreign language, dressed differently, adhered to different customs and mores, was automatically considered a barbarian. "Stranger" and "foreigner" have thus from time immemorial been pejorative terms, and often synonymous with "enemy."

It should not surprise us, therefore, that the world corporation is sometimes unwelcome even though it is the carrier of

Mere physical change, manifested by a new factory, a new building, or a piece of complex machinery generally does not arouse the passions of the populace. But when the change moves into the realm of ideas, a wholly different and more massive impact upon society follows. If, for example, a world corporation introduces the idea of upward mobility based only on merit and not on status, this may well offend an establishment fighting to preserve its privileges.

The nature of the value systems that are carried by world corporations, as agents of change, runs the gamut from simple improvements, like better lighting in manufacturing plants, to renovating whole neighborhoods. For example, Park Avenue in New York City north of Grand Central Station used to be lined on both sides with old apartment houses. It was not until a British-based multinational corporation, Unilever, saw the potential of putting a modern office building in this area that a whole new development was sparked in my city, and opened in time new opportunities elsewhere. Today, a certain portion of the pensions received by retired employees of the British Post Office come from rents on the Merchandise Mart in Chicago, which they own.

Old ideas die hard; yesterday's liberals, who feel that central, national control is the answer to everything, are still in control of many intellectual circles. They all labor under an old illusion, which John Gardner once put as follows: "Those who seek to bring societies down always dream that after the blood bath will be calling the tune." That outworn doctrine of the controlled economy-a relic of mercantilism-is becoming more and more a manifestation of the persistence of illusion over reality.